Profit falls 16% at Blue Power

Profit falls 16% at Blue Power

Business reporter

Wednesday, August 01, 2018

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A 16 per cent decline in net profit for the financial year ended April 2018 has driven soap maker Blue Power to renew calls to the Government for the removal of the coconut industry board cess and discriminatory rate of security cess at the port, both of which it names as creating competitive disadvantages for the manufacturer.

“We are amazed that a country which is emphasising local manufacturing and exports has a security cess at the port which amounts to a smaller charge for containers of imported soap than for containers of raw materials for making soap in Jamaica,” Managing Director Noel Dawes told shareholders in a statement adjoining the company's annual report.

It's the second time that the company has experienced a decline in its net profit for the year, moving from $121.8 million in 2017 down to $102.4 million in 2018, despite an eight per cent increase in sales. Before that, net profit of the soap and lumber company dipped to $69 million in 2015 — from $93.1 million a year earlier.

Blue Power blamed the decline for the year 2018 on price-cutting measures used to secure customer base in its export markets. At the same time, the company is also challenged by the reopening of the Dominica Coconut Products plant, which already has its products in St Lucia and Guyana, in addition to the opening of a Jamaican soap-manufacturing plant.

“In order to enter and maintain markets, we have had to offer very attractive prices which have resulted in the substantial improvement in export performance, which is now over 21 per cent of our Blue Power Division sales. The increase in export sales over the previous year was 34 per cent,” the company said.

The increase in sales for 2018, however, was not accompanied by any gains in the exchange rate, which was almost $21 million in 2016/17 and almost zero in the year under review.

Still, Blue Power remains undaunted by the fall-off in numbers and plans on combating these developments by continuing to offer the existing products at good prices, developing relationships with local distributors for co-packing, and introducing new products.

Already, Dawes noted, the company has established a relationship with a distributor in St Vincent and appointed an additional distributor in Guyana who now sells its Megablue brand of laundry soap.

“In Grenada, our distributor has started buying full containers instead of shared containers. In Barbados, the frequency of orders has improved significantly. Our distributors in the USA have mounted special efforts to improve their performance, especially in the south-east,” the managing director said.

He added that there has been significant improvement in sales and a dedicated container was delivered to the distributor's Miami warehouse in December. Blue Power is also in the process of establishing a relationship with an existing distributor of beauty soaps who will contract the company to produce five different varieties of beauty soaps under their brand name.

“We have just completed an advertising campaign in Jamaica to promote our Castile brand bathing soaps. This has resulted in more awareness of the brand which, we hope, will result in increased sales,” Dawes said.

For the Lumber Depot Division, Blue Power notes that it will continue to seize opportunities for discounts and better prices in order to offer a better deal for their customers while maintaining their margins at an acceptable level. Blue Power has also been working feverishly at securing additional parking space for the facility.

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