Profit dips as Paramount invests
Paramount Trading Jamaica Limited, which makes and supplies industrial materials, incurred one-off expenses that resulted in a two-thirds decline in its net profit in the August 2016 first quarter relative to last year.
The company, led by Hugh Graham, earned $15 million net profit on revenues of $252.7 million or substantially less than the net profit of $42.6 million earned a year earlier. Revenues and gross profit increased 6.3 per cent and 2.2 per cent, respectively, during the quarter.
"This was mainly due to one-off expenses incurred during the quarter, which will not recur for the remainder of the year. Staff and other costs also increased in line with the strategic direction of the company," according to Graham in statements accompanying the unaudited financial report.
The company remains optimistic on its growth prospects based on its new lubricants joint venture with Allegheny Petroleum. Specifically, its lubricant sales improved from $2.2 million to $10.2 million during the quarter, despite the continued depreciation of the Jamaica dollar which affects its input costs.
"We have also made progress in exploring new growth opportunities as well as improved efficiencies and service level improvements," stated Graham.
From 2015, Paramount announced plans to form a joint venture with Allegheny Petroleum in a move that would result in a US$4-million or roughly $500-million investment. In July, both partners launched construction of a 13,500-square-foot plant in Kingston to manufacture industrial and food-grade lubricants.
Paramount also started operating an oil-testing lab within the plant in order to offer a local option for testing oils in high-performance engines. The service will obviate the need to mail such oils overseas for testing.
Paramount anticipates that the plant and lab will improve the company's overall efficiency and position itself as a major player in the local and regional lubricant market.
Paramount became a publicly traded company in December 2012, two decades after its 1991 founding. The chemicals company, which recently celebrated its 25th anniversary, holds total equity of $595.7 million on total assets of $614 million as at August 2016.
The company operates from its Waltham Park Road offices in Kingston. Paramount import, distributes and raw materials and provides manufacturing services for Allegheny. It also distributes the Sika line of adhesives, admixtures and sealants.
Paramount surpassed the $1-billion mark in annual revenues for the first time in financial year ending May 2016. The company then earned annual profit after tax of $173 million, up from $146 million a year earlier.