Blue Power to expand production of specialty soap line

BY AVIA COLLINDER Business reporter

Thursday, June 23, 2016

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Dhiru Tanna, chairman of Blue Power Ltd, says the company will spend in the region of $30 million in the new financial year in order to increase production space and purchase equipment needed.

The planned investment is intended to meet expressed demand for packaged soap and also to satisfy rising sales outside of Jamaica.

For the year ended April 30, 2016, Blue Power saw a nine per cent rise in net profit to $76 million from $70 million in April 2016.

Tanna, noting that the five-year tax-free period on the Junior Market came to an end in April 2015, said in the report issued through the Jamaica Stock Exchange (JSE) that the substantial tax bite of $9 million affected earnings. Earnings per stock unit increased from $1.24 to $1.35, or by nine per cent.

On a more upbeat note, the chairman reported that total exports, especially to Guyana, increased by more than 50 per cent from $36 million in the previous year to $54 million in 2016.

"Thus far our exports have consisted mainly of blue laundry soap, but in the last quarter we saw an uptake of our carbolic soap which is a positive development, as it suggests that our bathing soaps are gaining greater acceptance abroad. We are beginning to gain more shelf space in retail outlets in Jamaica and have devoted additional resources to make further inroads," Tanna stated.

The company is planning capital expenditure of $30 million to boost production, especially for more wrapped products.

Tanna stated, "There is a definite shift from unwrapped soaps to wrapped soaps. In order to satisfy customer demand for wrapped products, we will need more capacity, and to this end we have ordered more equipment. In addition, we will activate a second line in our bathing soap division to meet the increased demand for carbolic and other specialty soaps."

The push, he said, will require a reorganisation of wrapping and production line, and the addition of equipment which is already underway.

"At the same time," the chairman noted, "the need to prepare for increased demand will require additional storage capacity for raw materials, which we will meet by leasing the lot next to our factory and creating the necessary warehouse facility. The estimated capital expenditure for these exercises is $30 million. We are mounting an aggressive campaign to promote our mosquito-repellent soaps which have been well accepted by those who have tried them."

The company will also ramp up marketing with an emphasis on television advertising.

Overall sales for Blue Power for the 12 months increased 15 per cent from $1.06 billion to $1.22 billion. The Lumber Depot Division showed an increase of 17 per cent and the Blue Power division improved by nine per cent.

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