Shareholders in ANSA McAl are set to lose TT$2.5 billion in 2025 from their investment in the company, following the directors decision to suspend dividend payments, (currently $320 million per year) for 3 years, with the stock price dropping 21 percent from $58 to $46 up to the end of last week.
In addition to losing the $320 million per year for the next three years, shareholders have already chalked up a loss on their shares of $2.1 billion, following the announcement in March, and it could get worse, with the bid to buy the stock at $45 and the offer to sell at $46, last Friday. The dividend suspension will conserve TT$951.5 million for the three years based on $1.80 paid in 2024, 2023 and 2022, but it has had a detrimental impact on shareholders.
In addition to cash savings from the suspension of dividends, the company will save the cost of servicing the twice-yearly dividend payment and will incur less interest expense as a result of the suspension.
ANSA McAL, the majority owner of Berger Paints Jamaica, decided to suspend dividend payments due to the acquisition of a company for US$327 million, which resulted in a US$$200 million loan.
This decision was published on March 21st, 2025, in the Chairman’s statement, which accompanied the audited financial results. According to the report, “ANSA McAL is confident that the reinvestment of dividends for this three year period will yield far greater long-term benefits – enhancing its competitive position, supporting expansion into new markets, and unlocking new growth opportunities. Moreover, ANSA McAL fully expects the result of this strategic decision to be a significant appreciation in its share price, ensuring that shareholders benefit from a stronger, more resilient, and more valuable company.”
Some shareholders do not buy the optimism expressed by the directors, at least not now. For the year ending December last year, revenue grew by 5 percent to $7.4 billion and profits climbed just over 10 percent to $571 million from $517 million in 2023. On the surface, the stock should have been rising, instead, it has fallen from a 2025 high of $61. Compounding the issue, revenue grew 9.6 percent to $1.8 billion for the March 2025 quarter. Profits for the quarter dived 50 percent to $54 million from US$107 million as finance cost surged from $10 million to $52 million.
The directors commenting on the 2024 results stated, “Beyond these outstanding financial results, we took a bold step forward in our long-term strategy by completing the largest acquisition in our 143-year history. The US$327 million acquisition of BLEACHTECH LLC, a leading US-based chlor-alkali producer, is a transformative move that positions us for even greater success.”
At the end of March, Shareholders’ equity stood at TT$8.2 billion. At the end of December last year, borrowed funds amounted to $2.6 billion, just around 32 percent of shareholders’ equity. With the leverage level so low, there seems to be no need to suspend dividends and, by extension, destroy shareholders’ investment.