Paramount Trading is reporting that its pandemic cost restructuring exercise is bearing fruit, even though net profits are down 43 per cent over the last three quarters.

According to the publicly traded company — a leading manufacturer and distributor of chemical raw materials in Jamaica — the cost restructuring exercise is yielding results on the expense side of the business.

Direct expenses closed the nine-month period ended February 28, 2021 at $691.79 million, a decline of 14 per cent relative to the $807.30 million booked a year ago.

Administrative expenses declined by six per cent to $266.77 million, down from the $284.03 million recorded for 2020. Selling and distribution expenses fell by 41 per cent for the nine months to close at $8.34 million owing to the cost restructuring exercise undertaken early in the pandemic.

Pre-tax profit for the last three quarters was $31.71 million, 43 per cent less than the $55.75 million reported in the prior corresponding period. Taxes were charged for the period amounting to $3.96 million relative to $6.97 million in 2020.

As such, net profit closed at $27.74 million, a 43 per cent decline compared to the 2020 outturn of $48.78 million. For the February quarter, net profit was down 13 per cent to $8.05 million.

Operating profit for the last three quarters amounted to $67.74 million. While this achievement is commendable in a pandemic period, it still fell short of the $83.95 million for the same period in 2020.

For the February 2021 third quarter, operating profit fell two per cent to close at $20.67 million coming from $21.08 million posted in the comparable period last year. Paramount Trading recorded a three per cent decline in total revenues to $1.02 billion coming from $1.15 billion reported in 2020.

Revenues for the third quarter declined nine per cent to close at $347.24 million coming from a year ago when it amounted to $381.51 million. The company is blaming the ongoing economic contraction caused mostly by the novel coronavirus pandemic on its declining revenues.

According to Paramount, which was founded by Hugh Graham, “the economic contraction continued to plague our income. However, we were able to extract a higher gross profit percentage from the reduced sales levels”.

Other operating income amounted to $18.78 million for the nine-month period compared to $39.62 million booked for the previous year’s corresponding period. For the third quarter, other operating income closed at $6.03 million (2020: $16.72 million).

Interest income amounted to $1.24 million while finance cost increased to total $37.28 million. For the last quarter, interest income and finance cost closed at $54,878 (2020: $335,933) and $11.53 million (2020: $10.86 million), respectively.

As a result, gross profit for the three quarters fell by approximately five per cent to $324.07 million. Gross profit for the comparable period in 2020 was $342.42 million.

For the February quarter, gross profit closed at $107.71 million relative to $111.30 million reported in the prior corresponding quarter.

The last three quarters, the company said, were very challenging, as it continued to battle the negative impact of the pandemic. “Our lubricant division was directly impacted by the general decrease in the transportation sector, while our food-grade division suffered from the closure of educational institutions and the lockdown of the entertainment industry,” Paramount said.

As at February 28, 2021, the company’s total assets were valued at $1.61 billion, seven per cent less than the $1.73 billion quoted a year ago. The main contributors to this were the decline in inventories and receivables which closed at $440.03 million (2020: $583.16 million) and $293.15 million (2020: $357.93 million), respectively.

This was tempered by an increase in right of use assets, which closed at $76.34 million (2020: nil). Shareholders’ equity as at February 2021 stood at $760.43 million (2020: $790.15 million), resulting in a book value per share of $0.49 (2020: $0.51).