Angostura posts $137m loss

Rum and other spirits sales increased but a once-lucrative business deal gone sour led to local producer Angostura posting a $137.3 million after-tax loss in 2007.

The net loss means that Angostura shareholders will receive no further dividends for that financial period.

The Laventille-based rum maker reported an improvement in core operating performance for the year ended December 31, 2007, up from the previous year, with an increase in gross operating profit from $243.2 million to $299.3 million, Angostura chairman Lawrence Duprey said in his published report of the company's audited financial statements.

The company's core spirits business reflected a solid increase of $102 million, primarily as a result of increased liquor sales and marketing efforts locally and abroad, with all classes of its spirits business, including bulk rum, local and export cases, achieving positive gains, Duprey said.
Last year, the group sold its ethanol production subsidiary to parent group CL Financial and this resulted in a reduction of $97.4 million in reported revenue for Angostura.

Even with higher sales and better marketing, the group still showed a $137 million loss, largely as a result of a dispute in a business deal with French spirits company Belvedere SA.
Angostura had to reverse its non-cash gains for Belvedere in 2006 when it disposed of the French company last August for around $3 billion.

This followed a "serious shareholder dispute between our group and the founding shareholders of Belvedere SA", Duprey said in the Angostura financial statement yesterday.

Angostura and CL Financial are currently in the process of finalising another sale, this time for the 86 per cent acquisition of the Lascelles de Mercado Group, owners of Appleton Rum and other brands.

"In view of the year-end loss position, arising primarily out of our Belvedere acquisition and subsequent disposal and the fact that an interim dividend of five cents per share was already paid, your board has decided that no final dividend will be declared this year," Duprey told shareholders.

Curtis Rampersad
Trinidad & Tobago Express Newspapers
April 12, 2008
http://www.trinidadexpress.com/index.pl/article_business?id=161308185

Wray and Nephew put on hold

The Agriculture Ministry has back-paged a request from rum manufacturer J. Wray and Nephew Limited for access to a substantial block of state-owned cane lands, saying no deal would be struck ahead of the divestment of the Sugar Company of Jamaica.

Wray and Nephew, a subsidiary of the powerful Lascelles deMercado group of companies controlled by William McConnell, wants access to 700 hectares on which to plant additional cane for molasses.

The lands eyed by the company are in Clarendon, and currently idle.

But Agriculture Minister Dr Christopher Tufton says the company's request is on hold until the terms of the SCJ divestment have been fully agreed with sugar and ethanol producer Infinity BioEnergy of Brazil.

Those talks are expected to lead to a signed agreement by June.

Leasing cane lands Tufton said the Government could not lease any of the cane lands currently under the control of the SCJ as they were part of the divestment deal.

The Government is selling the SCJ factories, but leasing the cane lands.

"Right now we are focusing on the negotiations," Tufton said Monday.

"When those negotiations conclude, then we decide how to proceed from there because those negotiations include all current cane lands and, therefore, you can't make an alternative arrangement until you conclude them.

"J. Wray and Nephew - the island's largest manufacturer of rum - has been trying for three years to gain access to the Clarendon lands.

Molasses prices have been rising on the world market, sending Wray and Nephew's production costs higher.

The company, which produces the premium Appleton as well as the Wray and Nephew white rums currently imports 40 per cent of the 60,000 tonnes of molasses it uses annually, but hopes to cut that bill by growing more cane and producing more of its own inputs.

Its distillery is based in St Elizabeth. Additional land needed Ideally, the managing director of Wray and Nephew's production department, Paul Henriques, said the company would want an additional 2,000 hectares of land to grow sugarcane.

For every 1,000 additional hectares of cane planted, he says, the company would be able to cut back on volume molasses imports by 5,000 tonnes.

Wray and Nephew paid an average of US$175 a tonne last year for molasses, with prices fluctuating within a band of US$140 to US$190 per tonne on the international market.

Tufton has not ruled out the possibility of leasing the additional cane lands to Wray and Nephew, saying "in those negotiations there may be possibilities.

"But those possibilities would not emerge until after the negotiations are completed with Infinity, which should be finalised by June.

Source:John Myers Jr., Business Reporter john.myers@gleanerjm.comJamaica GleanerFriday April 4, 2008 http://www.jamaica-gleaner.com/gleaner/20080404/business/business7.html