PARAMOUNT Trading (Jamaica) Limited is accelerating its expansion into manufacturing, building on existing operations in industrial chemicals, food ingredients, and lubricants as it prepares to announce a major new contract before the end of the year.

Chief Executive Officer Hugh Graham told Jamaica Observer that “before the end of this financial year, you’d have a big announcement”, revealing the upcoming manufacturing contract. He said the deal is being negotiated with a “big international player” listed on the New York Stock Exchange, but declined to provide further details citing stock exchange disclosure rules in Jamaica and New York.

This forthcoming contract is expected to expand Paramount’s production of lubricants, an area Graham describes as “where the real manufacturing growth is”.

The company has already laid significant groundwork for this expansion, with capital expenditure increasing by 17 per cent to $127.9 million in the year ended May 31, 2025, reflecting investments in plant and equipment. Meanwhile, inventories surged by 30 per cent to $863 million as the firm builds a buffer against global supply disruptions and prepares to scale manufacturing output which now accounts for only 7 per cent of the entity’s $1.72 billion revenue intake.

On the lubricants side, the company’s plant, established in 2017, serves key industrial customers including bauxite producers, reinforcing the strategic focus on this segment.

“We don’t import finished oil; we manufacture it here,” referring to the growing lubricants segment serving industries such as bauxite.

Additionally, to ready the company for this next phase, Paramount is investing heavily in operational and quality improvements. Graham describing manufacturing as “hard” and “expensive”, still underscored the critical importance of meeting international standards such as ISO 9001 certification as he expands his manufacturing push.

“We’re investing and upsizing our internal processes. The ISO certification, for example, is not an option; it’s a must-have. It’s not an option. So let’s say we’re talking to an international marketing company. They want to know that we’re ISO-certified because they want to be able to rely on our quality and how we say we do things. But for them to rely on it is that we need to be certified,” he told BusinessWeek.

This strategic focus on certification is not merely a compliance exercise but a fundamental requirement to unlock the multimillion-dollar opportunities in the lubricants market that Graham has long targeted. He has previously pointed out that the annual import of lubricants into Jamaica is about US$130 million (nearly J$21 billion), and Paramount has the capacity to capture US$30 million of that business. However, securing contracts with major multinational corporations is contingent upon demonstrating an unwavering commitment to quality and confidentiality. “It’s the same with lubricants,” Graham explained. “The multinational is saying, ‘You make a quality product, but we need a guarantee of that quality in every litre, every single batch. We need our formulations kept completely confidential.’ That requires a robust system. You have to make the investment upfront; the exponential growth comes later.”

Alongside ISO certification, the company is progressing through environmental, fire safety, and other regulatory approvals to ensure compliance and quality assurance for high-level manufacturing contracts. The firm is also focusing on training and upskilling its workforce to meet the complex requirements of modern manufacturing processes.

Graham highlighted that Paramount’s manufacturing operations already include a range of specialised products.

“Paramount is a kind of all-encompassing company,” Graham explained. The company manufactures a range of products, from food ingredients like cornstarch and baking soda and baking powder, to high-strength industrial bleach, a niche product vital for sanitisation in hospitality, medical, and industrial sectors. He detailed that the firm is “one of two or three in the island” producing high-strength bleach above 10 per cent concentration, meeting specialised industrial needs not served by typical household bleach products.

On lubricants, Paramount’s blending plant — built in 2017 — services industrial sectors including bauxite companies. “We don’t import finished oil; we manufacture it here,” said Graham, underscoring the company’s strategic shift deeper into local manufacturing.

This strategic expansion comes as Paramount’s lubricants segment, a key target for growth, has seen a deliberate scaling back of operations. While the company continues to manufacture for existing partners like Fesco and Allegheny Petroleum, the segment’s revenues declined 31 per cent to $106 million for the year ending May 2025.

Though manufacturing currently accounts for only 7 per cent of revenue, it is a strategic priority that comes amid significant financial pressure. Paramount’s long-term borrowings total $713.6 million, including a $700-million bond with a 12 percent coupon, and net finance costs consume over 65 per cent of operating profit.

Paramount’s immediate future hinges on its ability to convert manufacturing investments into consistent cash flow and profit growth. Graham remains cautiously optimistic, signalling that the forthcoming contract with a major international lubricant player could be a game-changer as the company strives to deepen its manufacturing presence and strengthen Jamaica’s industrial base.

Cash reserves dropped 18 per cent to $98.1 million as the company reinvested earnings into increasing inventories to buffer against ongoing global supply chain challenges. This build-up is integral to ensuring continuity of supply in volatile markets.

He added a note of optimism for investors, saying, “We’re about to release our first quarter results that you will be very impressed when you see them.”

Operationally, Paramount benefits from growth in its construction and adhesives segment, which expanded by 27 per cent due to local construction activity, providing a more stable revenue base during the manufacturing scale-up.

The outlook remains cautious. While the profit and operational expansion offer promise, the transformation’s reliance on heavy debt and the execution risk associated with manufacturing and certification milestones underscore a narrow margin for error. Investors will be closely watching for the anticipated announcements of major contracts and a reversal in cash flow trends. Should these materialise, Paramount’s strategic pivot may indeed signal a redefinition of its business for the decade ahead; if not, the financial burden of capital costs may threaten to stall its resurgence.

As of October 2, 2025, Paramount Trading’s shares last traded at $0.73 on the Jamaica Stock Exchange. Year-to-date, it is down 36 per cent.

GRAHAM…before the end of this financial year, you’d have a big announcement (Photo: Joseph Wellington)