Ansa McAl sets sights on expansion, ESG
A confident Anthony N Sabga III sat at a head table at Tatil’s head office in Port of Spain on Monday, explaining to stakeholders that the Ansa McAl group's current financial position – having seen a significant dip in profits for its 2022 financial year – was not its final destination.
Flanked by CFO Nicholas Jackman and executive chairman A Norman Sabga, the group CEO guided stakeholders through the financial statements, explaining that the decline in profits was a mere bump on an otherwise highly progressive and productive road.
Sabga III expressed a positive outlook for the group with plans to double its profitability and overall portfolio to become a $2 billion company by 2027.
Both Sabga III and Norman Sabga highlighted several strategies to achieve this goal which include acquisitions of high-profile companies, further expansion to other countries, and more importantly, the group’s plans to focus on environmental, social and governance (ESG) strategies that would take it to the next level.
Expansion, ESG main focus for Ansa’s growth
Sabga III told stakeholders that several of the plans to double Ansa’s profitability are already underway.
Ansa Bank – formerly Bank of Baroda which the group acquired – has started its digital disruption through the launch of its first fully digital touchpoints in San Fernando. The acquisition of Colfire also had a significant impact on the group’s business, said Sabga III.
“Our financial services group is a very significant contributor to the Ansa Mc Al Group,” he said. “We have doubled our market share in certain components of the insurance business with the acquisition of Colfire. "Additionally the acquisition of Bank of Baroda, rebranded to the Ansa Bank had a tremendous effect.”
Tatil chairman Ray Sumairsingh described Colfire – once under the now collapsed CL Financial empire – as a “strong brand,” one that has had a longer life than the group’s insurance company, Tatil. He said with the acquisition, the group plans to keep the company’s name alive.
“The important thing is to use both companies properly in the market space so that we don’t remain number two but become number one,” Sumairsingh said.
Sabga III added that Ansa made significant investments in Tatil’s technology for a better customer experience so that they now have 24/7 access to customers.
The financial sector is not the only area where Ansa plans to expand. Sabga III told stakeholders that the group’s beverage business, already operating in TT, Grenada and St Kitts and other areas in the region, has also expanded with the addition of Eagle Ray seltzer and Caribe. He said the company is adding to its partner brands footprint bringing Coors Light and Vita malt into local production. Sabga said that in the case of Vitamalt, Ansa would not only be manufacturing the product, but it will also provide packaging, adding to its already evolving packaging business.
But it would seem that the group plans to focus on ESG practices to catapult it forward.
In the beverages sector, Ansa plans to re-invest in the recyclable and renewables market. Sabga III, pointing out that group is already the region’s largest recycler and reuser of packaging, said it has refurbished its filtration system making it more environmentally-friendly.
“The older technology had a not-so-good effect on the environment,” Sabga said.
Sabga said the beverage sector has also brought back its bottle-washing station, further enhancing its capability of recycling and reusing.
Noting the opportunities for the group in Guyana, Sabga III said it is working on an agreement to provide clean water for Guyanese citizens, as talks for water treatment facilities are underway between Guyana and Ansa.
“(The conversations) with the Guyanese authorities and regulators are at an advanced stage and we are hoping that we would be favourably looked on,” he said.
In the financial sector, Ansa is also seeking to invest in clean energy. Its bank in Barbados, rebranded from Consolidated Bank, is leading the way in providing services, largely because of its support in modernising the island’s energy portfolio.
Locally, Sabga III said Ansa is in active talks with the University of the West Indies, on possibilities and opportunities through the commercialising of its research.
“Some of the research at they have done at the UWI have an immediate impact within the group’s portfolio and we can incorporate them as innovative products and take them to market, not just regionally, but globally,” he said.
A bump in the road
While the future looks bright, the group is mindful in its assessment of what is happening in the present.
For the financial year ending December 31, 2022, it earned $251.5 million in profits as compared to $697 million the year before.
Profit-before-tax was about $434 million as compared to $935 million the year before.
The group’s results were affected by non-cash market-to-market losses on investment portfolios in the financial services sector and in its parent company.
Jackman explained that these one-off non-cash losses in the group’s investment portfolio offset its numbers. He pointed out that if one adjusts for that swing in investment results, the group's financial outlook would be relatively level to its 2021 performance.
Norman Sabga assured that the reduction in profits was a mere bump in the road.
“What we are seeing now is a dip because we are very close, and you are looking at the last year,” he said. “But if you step back in the last 10 years the dip disappears and all you see is a straight line upward.”
Jackman also pointed out that while there were losses in the financial segments and in other areas because of investments that are still being held, there were also gains in revenue including in Ansa’s commercial bank facility, bottling and brewing businesses, construction and other areas.
“We had a $32 million goodwill impairment that we applied to our investments,” Jackman said. “We also had a $35.2 million swing in unrealised losses in this year because of the investment portfolio held by the parent and then we had one-off expenses related to cybersecurity, and increased professional consulting costs as we continue to build out our risk management and sustainability capabilities.”
Ansa confident in the future
“We are very confident that the investments we have made have proven to be better than the dip in the whole market and in years to come it will be significantly better,” Norman Sabga said.
He said years ago when based on the S&P accounting standard, which Ansa uses to calculate its financial position, companies had to choose between being able to hold investments in the financial sector to maturity, or hold it for trade.
“We decided to hold our investments for trade,” he said. “But once you make that decision you can’t go back.”
Sabga III confidence in the company and the team saying they were able to weather a perfect storm of financial downturn, global crises and supply chain issues.
He said despite all the issues that hit the business they were still able to thrive and keep every single employee.
“I am very pleased and proud about the way the leadership team took control of the situation. How they met every single morning; how they supported the employees and their families.”
“We weathered it well, I think.”
"Ansa McAl sets sights on expansion, ESG"