The year 2018 was definitely not a sweet one for local ice cream producer BICO Limited.
In its Annual Report 2018, the company reported that sales and revenues were down by 0.9 per cent.
Executive chairman Edwin Thirwell said this was due to several factors including the implementation of the controversial National Social Responsibility Levy (NSRL) and a foreign currency surcharge which led to difficult trading conditions.
He admitted that BICO had underestimated the cumulative effect of NSRL and that the ramifications were far more serious than initially thought
“It’s not a stellar report but in these circumstances, a flat performance, . . . is in fact a remarkable achievement.
“Following the introduction of the NSRL plus a foreign currency surcharge, we were unable to fully recover the increased costs, resulting in lower margins in order to retain our loyal customer base by remaining competitive and affordable,” Thirwell said today during a press conference at the company’s Harbour Road headquarters.
He said what also complicated the situation was the fact that when the NSRL was repealed, BICO still had $2 million worth of stock on which it had already paid the dreaded tax.
“Everybody is well aware that the last 12 months have been somewhat turbulent, not only for BICO but for everyone. We’ve tried to face the challenges head-on because we are operating in all kinds of fields.
“We saw our margins completely decimated and removed. To make matters worse, when NSRL was taken off we found that we still had $2 million worth of stock in the ice cream warehouse on which we had paid NSRL, and the next day it was gone, but we had already paid it,” Thirwell said.
Due to the company’s poor performance, a decision was taken by its directors not to pay any dividends for the year which ended September 30, 2018.
However, Thirwell said margins were recovering on stock bought post-NSRL.
But he warned that he expected both 2019 and 2020 to be tough financially for the ice cream company, especially due to the Barbados Economic Recovery and Transformation (BERT) programme.
Thirwell said growth was not expected until at least 2021.
“We expect a flat financial year in 2019. There are no expectations of a massive leap in earnings…2020 is similarly going to be a recovery period. Everyone from the Governor of the Central Bank to the IMF [International Monetary Fund] is saying expectations are modest.
“The light at the end of the tunnel may well start to be visible by 2021,” Thirwell speculated.
The chairman said he expected sales of the company’s eco-friendly biodegradable food wares to do well, following the introduction of a ban on single-use styrofoam and plastic products scheduled to take effect on April 1.