BICO disappointed in FTC’s denial of takeover

Barbados ice cream manufacturer BICO Ltd is reporting increased revenues for the last financial year but is not pleased that regulators have blocked its takeover by a Trinidadian company that it said could have improved its fortunes even more.

Executive Chairman of BICO Edwin Thirlwell said the decision by the Fair Trading Commission (FTC) was not in the best interest of BICO’s consumers, employees or shareholders.

“We are extremely disappointed by the Fair Trading Commission’s decision not to approve the takeover by a Trinidadian ice cream company. This would have given the company the benefits of economies of scale and increased export viability,” he said in a statement.

The Trinidad and Tobago-based HADCO Ltd, the parent company of Creamery Novelties Ltd, had proposed to acquire BICO through its Caribbean LED Lighting Inc. subsidiary.

The FTC, in a ruling, stated that the merger would result in a “substantial lessening of competition”.

However, Thirlwell said: “We believe the decision was not in the best interest of consumers, employees or the 350 BICO shareholders who were denied the opportunity to sell their shares at the attractive price offered. It also restricts competition in the local market which will be detrimental in the medium term.”

In relation to its financial review for financial year ending September 30, 2022, BICO noted that its total revenues “increased from $13 million in 2021 to $15.2 million in 2022, an increase of 17.1 per cent, the highest annual increase since 2019”. 

It attributed the increased revenues to a resurgence in key segments of the business including ice cream which remained strong despite increased competition.

“The company’s performance over the past financial year has [been] something of a roller coaster. Revenues surpassed pre-pandemic levels but profit objectives were derailed by significantly increased cost of ingredients, high shipping costs and excessive increases in energy charges,” it said.

The company reported that its food services division has seen increased demand for biodegradable compostable food containers and frozen premium bakery goods for the hospitality sector while the Harbour Cold Store has seen a greater demand during the review period.

BICO said its net income for the financial year after tax increased by 126 per cent.

“Unfortunately, the company incurred a net comprehensive loss at year-end due entirely to a loss on the value of assets in the company pension plan for employees for which the company is sponsor. We are advised by actuaries that a full recovery is expected in the financial year 2023,” it added.

The company noted that the first quarter of the current financial year, October 2022 to December 2022, continued to show an improved performance in revenues, operating income and net income when compared to the same period in 2021, with an increase of 126 per cent, due to cost controls and operational efficiencies.

BICO officials said they were cautiously optimistic about future performance, explaining that with the expected revival in global tourism then Barbados would continue to show growth as visitor arrivals numbers continue to increase.

“These forecasts are, however, subject to unforeseen events and the high cost of living and inflation in our target tourist markets may dampen demand for travel. With hostilities continuing in Europe the future remains uncertain,” the release added.

It said that over the remaining seven months of the current financial year, the focus will be on increasing profitability while offering quality products at competitive prices.

“In 2023, we plan to offer a factory tour experience to schools, church groups as well as tourists. They will have the opportunity to see ice cream and novelty production from ingredient input to finished products,” it added. 

(PR/MM)