Sun | Feb 25, 2018

Blue Power doubles profit

Published:Friday | December 23, 2016 | 12:00 AMSteven Jackson
Dr Dhiru Tanna, chairman of Blue Power Group.

Blue Power Group, which manufactures and sells laundry and beauty soap as well as lumber, grew its net profit for the three months ended October 2016 to $32.1 million compared to $13 million during the corresponding period last year, or 149 per cent higher year-on-year, largely attributable to a hike in its revenues.

It resulted in earnings per stock unit for the six months increasing to $1.23 from $0.56. On news of the financials, the market pushed the stock price to $25, up from $22 from the start of the month to better reflect earnings.

"The economy is finally beginning to show some strength, which bodes well for our future. Our past efforts to maintain good relations with our customers, suppliers and staff will pay positive dividends as we move forward," stated Chairman Dhiru Tanna in a statement prefacing the financials.

Combined sales for the quarter ended October 2016 were $339 million compared to $297 million for the same period last year, an increase of 14 per cent. The Lumber Depot division saw an increase in sales of $9 million, from $219 million to $228 million, while sales for the Blue Power division increased by $34 million, from $77 million to $111 million.

Blue Power Group operates from Victoria Avenue, Kingston ,and its shares are listed on the junior market of the Jamaica Stock Exchange. The company, in previous quarters, announced that its soap sales were hurt by cheaper imports into Jamaica and the reduced disposable income of consumers. The company now benefits from its ongoing marketing efforts, new products, increased disposable income of consumers and exports.

"It is important to note that our export sales continue to perform well, having increased by 47 per cent from $25 million last year to $36 million this year. We were also able to generate substantial income from our accumulated cash balances, which provide a cushion against the devaluing Jamaican currency and are available to seize buying opportunities when they arise," said Tanna.

The new soap wrapping allowed the Blue Power soap division to increase sales of bath soaps, although the laundry soap sales registered a slight decline. The company said it continued to push for increased shelf space in retail stores and that it managed to maintain and increase its presence in chain stores as well as individual outlets.

Upgrading production facilities

The group previously disclosed plans to upgrade its production facilities at its head office at a cost of some $30 million, financed from internal resources. It will include them adding an extra line for bathing soaps, adding new warehouse space, new wrapping machines and streamlining the production of its laundry soap.

"The reorganisation of our production facilities at Victoria Avenue is progressing apace, although it has not been completed as yet. The new machine for wrapping single bars of laundry soap has already been installed, as a result of which we should see some of the products from this machine on the shelves for the Christmas season. The additional warehousing space has been completed and is already being utilised," Tanna said.

At the company's lumber store in Papine, St Andrew, preparations are under way to air-condition the main sales area to provide a more comfortable environment for customers and staff.

The company's equity stands at $619 million, up from $515 million a year earlier.