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Blue Power soap division dominates group profit

Published:Wednesday | August 20, 2014 | 8:00 AM
Dr Dhiru Tanna, chairman of Blue Power Group. - File

For the first time in Blue Power Group's history, its soap division was responsible for more than 50 per cent of total net profit, according to the latest annual results.

Blue Power Group has kept up its sales figures for 2014 but has seen overall profits decline by 10 per cent.

Its recent annual report for year ending April 2014 show total sales of $1.046 billion, or about $2 million less than the previous year.

Blue Power has two main business operations. Its soap division, which manufactures laundry and beauty soaps, and its hardware retail business, the Lumber Depot.

Sales for the lumber division declined by two per cent over the period, to $728 million, while soap sales increased by five per cent to $318 million.

"Given the overall contraction of demand in the country and the lack of demand from the foreign agency which worked with us during the previous two years, we were pleased to achieve the same level of sales as the previous year," said the directors' report signed by Dhiru Tanna, the chairman and founder of the group. Major Noel Dawes is managing director.

Despite sales holding firm, profit declined by 10 per cent to $93 million from $104 million the previous year.

The Lumber Depot division contributed $42 million in profit compared to $51 million for the Blue Power division. The situation was reversed in 2013, when the Depot earned $61 million compared to $42 million for soaps.

Earnings per stock unit also declined by 10 per cent from $1.84 to $1.65.

"Noteworthy is the fact that support from local customers for both divisions increased when compared to the previous year," the directors' report said.

In the overseas markets, Blue Power's US distributors have "undertaken significant marketing activities especially with respect to the Blue Power Castile soaps. In Britain, distributors have shown increased interest especially in the carbolic soap product," the report said.

But the downturn in the economy in Barbados has negatively impacted sales there, while there is a "renewed effort" to push sales in Trinidad and Tobago, the report said.

Looking ahead, the company says it "will continue to focus on customer service, competitive prices and (the) introduction of new and more attractive products while keeping a lid on expenses to deal with the present-day realities and be prepared to benefit as the economy gathers steam".

Blue Power will pay a dividend of 15 cents per share on August 15.

Its stock last traded at $9.06 on the JSE Junior Exchange, at the low end of its 52-week bad of $9 to $10.

richard.browne@gleanerjm.com