PARAMOUNT Trading Jamaica Limited (PTL) recorded a 34 per cent increase in its third quarter — November 1 to February 28 — revenue to $463.96 million, which was the highest in its 31 years of operations as the economy improved from the reduction of curfew hours and other government measures against the novel coronavirus.

PTL manufactures and imports various chemicals which are sold to a wide range of customers in the automotive, food, and sanitation industries. The reopening of schools, the hospitality and entertainment sectors plus increased activity in the transport sector along with revenue growth strategies pushed demand up for products, primarily in its Food and Technical Grade division.

Even with the rise in cost of raw materials and supply chain disruptions, PTL was able to ink a 47 per cent improvement in its gross profit to $158.19 million and push its gross profit margin up from 31.02 to 34.02 per cent in 2022. With cost controls limitng the rise in operating expenses to only $105.41 million, PTL’s operating profit rose by 208 per cent to $63.69 million, which is the highest it has reached in more than five years. The company also benefited from the lubricant-blending plant Allegheny Petroleum Products during the period.

“Paramount has been experiencing increased demand and opportunity as a result of the current global market conditions. We have been working through the challenges with our customers to minimise the impact during the extensive disruptions in the market and problems being faced with supply chain. Paramount looks forward to the continued partnerships with companies such as Fesco and the increased build-out of third-party contract manufacturing opportunities. Paramount is in talks with a leading chemical and janitorial service provider Manpower & Maintenance Services Ltd Group that you will hear about in the near future. We look forward to engaging other companies to discuss contract manufacturing opportunities,” stated CEO Hugh Graham.

PTL’s net finance costs decreased by 17 per cent to $9.47 million as a result of the company refinancing its preference share debt with a JMMB Bank loan. After accounting for a higher tax bill, PTL’s net profit for the third quarter jumped by 489 per cent to $47.44 million. This was the company’s best third-quarter profit, with an earnings per share of $0.031 compared to the $0.005 in the prior period.

PTL’s revenue for the nine-month period stands at $1.23 billion, which puts the company on track to not only surpass the $1.44 billion in its 2021 financial year (FY), but also exceed the $1.60 billion earned in 2019. The nine-month net profit is 242 per cent higher than the prior period at $94.95 million and is just below the $101 million earned in the 2017 FY.

While PTL has managed to achieve these significant results, the company has $425.13 million in debt due in 2024. While the company managed to refinance the preference share debt through an unsecured bank loan, the loan was only disbursed for 24 months. The company’s tax remission ends at the end of 2022 as well, which means it will no longer benefit from a 50 per cent reduction on its normally applicable 25 per cent tax rate.

When questioned about the company’s plan going forward, Graham said, “This is a key focal point for the management team and we are exploring several options. Paramount benefited from lower finance costs based on our conversion of our preference shares. We will continue to explore options to raise equity as we continue to expand and drive shareholder value as persons have expressed an interest in share ownership.”

The company acquired the Seprod bleach plant in October 2017 and has made significant upgrades to the facility. This includes improvement in the labelling and equipment, which has allowed it to produce bleach up to 15 per cent in strength and focus its initiatives on being a viable import substitution product. PTL is currently in the Export Max programme to realise greater exports, with Florida and Belize being markets of interest.

PTL’s total assets grew by 11 per cent to $1.79 billion as the company’s cash and inventory balance rose to $102.38 million and $504.97 million, respectively. Total liabilities increased by 14 per cent to $961 million, while shareholders equity closed the period at $829.57 million. PTL’s stock price halted on Tuesday as it hit a 52-week high of $2.85, which hasn’t been seen since June 2017. The stock closed the week at $1.91, which leaves it up 21 per cent for the month and 53 per cent year to date. The market capitalisation was $2.95 billion.

Although the country is seeing signs of a rapid rebound, there still remains headwinds in the form of delays in China, the war in Ukraine, and a spike in various commodities. Despite these challenges, the CEO believes the company is in a great position, especially as it continues to seek new deals to manufacture for third parties.