Agostini's setting sights on Jamaican expansion

Agostini's Limited is looking to build out its market presence in Jamaica following its recent Health Brands Limited acquisition and other regional acquisitions in the last year.

While Agostini's Managing Director Anthony Agostini noted that the acquisition price would be confirmed in the company's 2023 annual report to be published in December, he noted that this was the company's first foray into the Jamaican pharmaceutical distribution market. Agostini's is a Trinidad-based conglomerate engaged in the distribution of fast-moving consumer goods (FMCG), pharmaceutical goods, and manufacturing of certain food products. It has a dedicated pharmaceutical distribution companies in Trinidad and Tobago and Barbados, along with controlling interests in pharmaceutical distribution companies in Guyana, St Vincent, Grenada, and St Lucia.

"Yes, Health Brands is our first entry into Jamaica. The main pharma brands (or should we say 'lines') carried are Health 2000 Canada, Asopharma, Merck Sharp, Rexall Sundown, Ferring, Perle, and then we do a number of hospital and medical supplies and personal care products. Our expansion plans will be to expand our offerings over time, with a view to improving the health-care products available to the Jamaican public," the Agostini's managing director told the Jamaica Observer in a recent e-mail.

Agostini's Jamaican acquisition will see it compete against other listed firms such as Massy Holdings Limited, Seprod Limited, Lasco Distributors Limited, and Medical Disposables and Supplies Limited, which are some of the larger pharmaceutical distributors in the Jamaican market for several major pharmaceutical brands. The first three mentioned companies recently were awarded contracts worth $9.18 billion to supply the National Health Fund over the next three years. Cari-Med Group Limited also scored $3.69 billion in contracts during the recent signing as it also considers a potential public listing.

Health Brands was acquired on August 3 from Smith Russell and Company Limited, which is controlled by Athol Smith. Health Brands was acquired from GraceKennedy Limited in August 2006 when it traded as Medi-Grace. The company has been in operation since March 1975.

Agostini's pharmaceutical and health-care segment saw revenue for the nine months climb 21 per cent to TT$1.22 billion ($27.68 billion), which was boosted by the recent 100 per cent acquisition of Barbados-based Collins Limited and Carlisle Laboratories Limited on December 1. The segment also saw operating profit rise 21 per cent to TT$164.50 million and profit before tax come in 20 per cent higher at TT$149.37 million ($3.39 billion) for the nine-month period up to June 30.

Agostini's also acquired 80 per cent of Chinook Trading Canada Limited in May. Chinook is a Canadian-based trading company that distributes Canadian, USA, and its own proprietary brands in the Caribbean. The company mentioned that the acquisition would benefit the wider group from improved logistics capabilities to access to new customers and new North American-based suppliers.

While the acquisition price wasn't disclosed for either deal, the group's consolidated cash flow used in investing activities was TT$408.55 million ($9.29 billion), which would represent cash spent on acquisitions and other company investments. Agostini's reported a TT$77-million ($1.75 billion) gain on acquisition of Collins and Carlisle in its second quarter and TT$2.15-million gain on acquisition related to Chinook in its third quarter.

"The one-off gain on acquisition is primarily as a result of the acquisition of Collins and Carlisle in December. The integration of any new business takes time and effort as people and culture issues must be taken into consideration. I believe, however, that being very mindful of this has allowed our group to make the appropriate decisions to successfully integrate the new businesses. The job is by no means complete, but I think it is progressing in the right direction," the Agostini boss said regarding the recent Barbadian acquisitions.

Agostini's second-quarter revenue moved up 15 per cent for the third quarter to TT$1.15 billion, with operating profit coming in at TT$109.12 million. Consolidated net profit was TT$72.46 million, with TT$55.38 million being attributable to shareholders, which resulted in an earnings per share (EPS) of TT$0.80.

For the overall nine months, revenue was up 14 per cent to TT$3.55 billion, with operating profit rising 16 per cent to TT$379.37 million. Consolidated net profit increased 56 per cent to TT$327.16 million, with TT$264.53 million being attributable to shareholders with an EPS of TT$3.83.

Total assets grew 24 per cent year over year to TT$3.83 billion, with the consolidated cash position moving down from TT$202.58 million to TT$2 million since the start of the new financial year. Total liabilities and equity attributable to shareholders closed the period at TT$1.80 billion and TT$1.60 billion respectively.

The company's share price closed Tuesday at TT$68, which leaves it up 36 per cent year to date and with a market capitalisation of TT$4.70 billion. Based on the trailing 12-month EPS of TT$4.53, Agostini's price to earnings ratio is 15 times. Agostini also paid a TT$0.40 or TT$27.64 million dividend on June 30.

Anthony Agostini will retire from Agostini's at the conclusion of the company's annual general meeting on January 31, 2024, with current Finance Director Barry Davis to be appointed chief executive officer on February 1. Agostini has served on the board for 33 years and as managing director for 18 years. His retirement comes as he recently attained the age of 70, which is when director's need to retire from the board. Trudy Ramdath was appointed group controller on May 29 and Dr Wayne A I Frederick was appointed a director on March 1.

"Supply chain disruptions which came about during COVID times have largely returned to normal, with only the odd product being still subject to supply delays. Both the Agostini's group and Health Brands expect to continue on a similar positive trajectory as has been the case for this year so far," Agostini closed on the future outlook of the business.

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