Massy Group, 100 years and beyond

The Massy Group, distribution, retail, gas products and automobile and machine holdings company, celebrated its 101st year in February.

The company, established on February 1, 1923, has grown over the past century to be an international conglomerate and a central figure in TT, and the Caribbean as a whole.

Now, with the company facing a new direction for the next century and new leadership in the form of CEO David Affonso, Massy is well on its way to reaching its main goal of expanding to becoming a $25 billion company by the year 2030.

Speaking to Affonso and chief financial officer James McLetchie at their office at BHP Building at Invaders Bay last Friday, Business Day was told its focus for the next hundred years is to expand in a responsible manner.

Massy Group CFO James McLetchie. – Photo courtesy Massy Group

The first goal in Massy’s plans for expansion is to pay dividends to shareholders, particularly the 600,000 shareholders who are pensioners.

“We are simply the stewards of their money,” McLetchie said. “They invested their shares and a lot of them are institutional investors. That is an important role to play to make sure that those dividends are paid.”

From Hi-Lo bags to Massy bags

In 2014 Massy re-branded from the Neal and Massy Group to Massy, as part of a comprehensive re-branding exercise, with the aim of unifying all subsidiary companies and to create a strong corporate identity. The re-brand included a change in the group’s aesthetics, including the introduction of the now well-known Massy logo, which replaced iconic insignia such as the Hi-Lo logos on its grocery bags.

“The Massy re-branding was to make it a little clearer the size and scope of the company, so the people buying shares would understand that Massy is not just Massy Motors or Massy Stores,” Affonso said. “Massy is into a lot of businesses and we have a significant footprint across the Caribbean. I think that, by and large, it worked, because people got a sense that Massy is pretty large.”

Massy – which trades as Massy Holdings Ltd – employs more than 13,000 people, operates in eight countries, including the US, Colombia and several countries in the Caribbean and is the holding company for over 75 businesses. In its latest consolidated financial statements for the six months of the year ending June 30, the company boasted of a revenue of over $11 billion revenue, with a profit after tax of $465 million. Affonso said 70 per cent of the company’s business now comes from outside TT.

Long ago, the company was considered a conglomerate, with several companies such as Nealco, Neal and Massy and Hi-Lo stores, which were not necessarily connected but operated under one umbrella.

Massy Stores head office on Wrightson Road, Port of Spain. – File Photo by Roger Jacob

“Each small company on its own doesn’t have strength, but when you say all of them are owned by Massy, then you will be borrowing on Massy’s strength,” Affonso said. “When you are negotiating with a service provider, if you are buying paper for the office, you are buying for 75 companies, so it gave some advantages.

“What it doesn’t allow for is when you want to go further afield (internationally, etc) you don’t have the scale or size.”

In 2019, Massy concluded that in order to achieve the growth that it wanted, it would have to expand wider regionally and even outside of the region.

It also needed to design a business portfolio that would support the company’s plans.

Massy divided its business into three portfolios – integrated retail, motors and machines and gas products.

Its integrated retail portfolio, which includes Massy Stores and Massy Distribution, accounts for about 60 per cent of its business.

“A lot of people see it as just stores, but the distribution side is the same size, and maybe bigger than the stores side of the business. That is where we represent lines like Colgate, Palmolive, etc. We sell not only to Massy stores, but the competition as well,” Affonso explained.

The motors and machines portfolio includes the Caterpillar dealership known as Trac Mac and all Massy Motors, including its motor dealerships in Colombia and Guyana.

The gas products includes its gas distribution company IGL (St Lucia) IBC Ltd, which was acquired in 2022 for US$140.3 million.

Massy Group CEO David Affonso. – Photo courtesy Massy Group –

That same year Massy announced the acquisition of Rowe’s IGA Supermarkets – a chain in Florida – for US$47 million. It also announced the purchase of Air Liquide TT Ltd for US$58 million.

With its new goals in mind, it is now refining its portfolios by evolving into an investment holdings company.

“When we did the portfolio model, each of those pillars run like its own group – it has its own team, it makes its own decisions and it would feed back into the parent, so the parent would become the sum of its parts.

“What we are doing now is refining the structures that support it. We will look for capital for the entire group and decide where they are deploying it to get the best returns,” Affonso said.

McLetchie said the company will now look more into investing in the performance of the companies under its portfolios.

“We are going to move to get to $25 billion by 2030. That is going to come from core growth, because the business is growing. It is going to come from expansion into markets like Guyana – we are going to put US capital in there and grow there, but in some cases we will find there are specific things we may buy. We know what we want to acquire and what we don’t want to acquire.”

He added that the 2030 strategy also surrounds reducing its currency exposure.

“That means a lot of our growth will generate hard currency so we can move around the markets.”

Affonso said its decision to partner with SuperPharm, handing over its pharmaceutical section to the pharmaceutical distribution company. was also a move to help Massy focus on its core business portfolios while enhancing service and convenience for its customers.

“Simply put, we put customers first,” he said. “We want the customer to have the best customer experience when they shop with us.”

He compared the relationship to groceries and supermarkets in the US, noting that companies such as Target partners with CVS Pharmacy to provide the best service.

“We want to focus on the supermarket business. We put the pharmacies there first of all to give customers convenience – but we are not pharmacy operators.

“We always try to bring innovations such as the self-checkout and all these things. We always try to be first to market with first-world innovations and bring that to our customers here to elevate the shopping experience. The alliance with Superpharm gives us the opportunity to have our customers have the convenience of a pharmacy, but one that is run by a pharmacy operator, as opposed to a side business for us.”

Massy Group CEO David Affonso and CFO James Mc Letchie, speak to Business Day on August 16. – Photo by Angelo Marcelle

He added that the change from Neal and Massy to Massy did not change its influence, as its branding can still be seen wherever there is a Caribbean person.

“The Massy bag is almost as iconic as the Hi-Lo bag. I have seen that bag all over the world,” he said. “If you meet a Trini or someone from the Caribbean, they will have one in the back of their car. You can see it on the beach in some countries – you can’t miss it.”

Facing changes and challenges

Massy didn’t make it this far without facing a number of challenges and changes. One of its most recent was triggered at its annual general meeting in December 2023, when its then general counsel, Angelique Parisot-Potter, raised an issue over money being spent on a leadership programme. She claimed it trained people to communicate with the dead and heal with “white light.” She said the programme took up valuable foreign exchange and required frequent travel to Fort Myers, Florida.

After an internal investigation, the company’s executive decided that the programme did not pose any danger to Massy’s operations.

Investigators concluded that Massy executives were free to select training programmes of their choosing.

However, as the matter unfolded, CEO Gervase Warner decided in February to retire a year early, opening the door for Affonso to take up the role in April.

Affonso said the situation caused a bit of noise in the public space.

Warner chose to put the company first in taking early retirement, he said.

“We are a publicly traded company and we were cognisant of that, because shares sometimes move on confidence as much as performance,” he said. “Gervase had one year left, and as he is, he took a hard look and asked himself what would be in the best interest of the company – would it be better to stay and run his time, or step aside and allow the company to move forward and not be at the centre of controversy. What he did, I think, is quite honourable, in that his thinking was that the company was more important than the individual.”

Warner’s early retirement seemed to cause a domino effect, as in the following months several other executives decided to step down.

Parisot-Potter took administrative leave during the investigation, leading to Wendy Kerry’s being appointed acting general counsel in January, and later on taking on the role permanently, as Parisot-Potter left the company.

Vice president of global expansion David O’Brien announced his resignation from the group, effective June 8, in March.

Alberto Rojo also retired as senior vice president of strategy and business development in the gas products portfolio effective June 30. His retirement was posted on May 13.

On May 23, group executive vice president of people and culture Julie Avey also announced her retirement, effective May 31.

Affonso said while the executive has seen several changes, it does not affect the company’s business operations. He said the fact that the company had replacements for all the people who retired was testament to the depth of the company’s executive roster.

“I have always been the emergency successor for Gervase,” he said. “If he is out of the country I would normally hold his delegation.”

He said when he was appointed CEO, he and Warner, who worked with each other for 14 years, went through a transition period, completing a checklist of tasks that needed to be done to complete the transition.

He said while the transition was handled responsibly, changes at the top led to some executives making their own decisions on whether to stay or move on.

“As with any change at the top, direction sometimes changes a bit. There may be some course correction, or the person at the top may probably have a different view of how things should happen,” he said. “Other executives will also have decisions to make, as with any inflection point, at any point of change.

“Those changes take place and it is pretty normal, there is nothing sinister about it.”

Massy, like other businesses, was also affected by crime, with the death of Che Mendez, an employee with Massy Distribution who was shot dead in St Ann’s in April. In June 2023, Allanlane Ramkissoon, employed with Massy Energy Engineered Solutions Ltd also died after suffering burns in an incident at the NiQuan Energy gas-to-liquids plant at the former Petrotrin compound at Pointe-a-Pierre

The company’s challenges were not limited to crime and accidents:

Massy Stores was also the victim of a cyber attack in 2022 affecting services in TT and Jamaica.

Affonso said part of the systems and structures discussed in the development of its new directions included mitigating risks to infrastructure, systems and, most importantly, people.

“We have a chief risk officer, and one of the things in his portfolio is to identify the likely risks,” Affonso said. “I like to put it that he handles what keeps you up at night, and what you worry about.”

“One of the risks you have is crime, with our stores. You can put security in place – physical security, that is one piece of mitigation there. You could have cameras, that is another piece of mitigation. You could have your car parks better lit; that is another piece of mitigation.

“Even with cybersecurity there is a risk you put as much as you can in place in terms of firewalls and all the rest of it and then you insure against those risks. That is pretty much true across the entire business.”

He said immediately after Mendez’ death the group stopped for a couple days to look again at the company’s security policies. He said the company spares no expense in protecting its people.

Affonso added that the company also ensures staff have access to employee assistance programmes to help them deal with mental health and the struggle to maintain a proper work/life balance.

The power to do more

McLetchie said when Massy meets its goal in 2030, it will be able to do more for its employees, its shareholders and the communities in which it operates, and ultimately reach its goal of becoming a force for good.

McLatchie and Affonso said Massy already contributes to people through the Massy Foundation which takes one per cent of the company’s profits to support communities and engage in giving back to the people.

Affonso added that each Massy store is connected to one or more charities in its community.

“Sometimes what gets lost in the performance numbers is the other things – the people, and the things we are able to do for employees and communities. We don’t like to boast about it,” McLetchie said. “I would argue that the more powerful we are financially, the more we get to do these things that we don’t talk about.”

“We are not doing it for branding,” Affonso added. “It’s not about that, it’s a part of our culture. It is like when you bring up children you teach them certain values about doing things properly. I think it gives our team the opportunity to help others and give back.”

Affonso, in speaking on becoming a $25 billion company said it would only take a ten per cent increase, year-on-year to meet the goal. He said, a major part of meeting the goal is managing the company’s cash flow.

For the six months ending June 30, 2023, the company garnered $188.9 million in hard cash, according to its consolidated financial statements. For the same period this year, Massy garnered $640 million in cash.

Affonso said the management of the cash flow through simple discipline – ensuring that the company doesn’t buy more than it needs, and that it gets paid on time – freed up over $400 million.

Affonso added that the adjustment in cash flow directly affects its goals of ensuring shareholders are paid the dividends they deserve.

“You can’t pay dividends with losses,” he said. “You have to pay them with profits.”

 

The post Massy Group, 100 years and beyond appeared first on Trinidad and Tobago Newsday.