Blue Power Group has put a price on the tariff shock facing its soap business, estimating that new taxes on imported raw materials are now costing the company roughly $100 million a year.

The listed manufacturer told the Jamaica Observer that the additional cost has become a major driver for its turnaround plan, as it works to squeeze more efficiency from its existing operation while pushing into higher-margin soaps and expanding its manufacturing footprint in Kingston.

The soap manufacturer had already disclosed that a 40 per cent tariff on the landed value of key raw materials used in soap production, together with higher shipping costs on inputs sourced from Asia, was squeezing margins. However, neither its 2026 annual report nor its first-quarter results put a dollar value on that burden.

“Blue Power has had to react aggressively to the recent imposition of approximately $100 million annually in new taxes on raw materials, arising from the recent decision by the CCJ,” general manager Vishwanauth Tolan told the Business Observer.

TOLAN…Blue Power has had to react aggressively to the recent imposition of approximately $100 million annually in new taxes on raw materials, arising from the recent decision by the CCJ.

He added that the cost has been “a key catalyst for Blue Power’s turnaround and strategic plan”.

The tariff stems from the application of the Caricom Common External Tariff following a 2024 Caribbean Court of Justice (CCJ) decision involving soap-making inputs imported from outside the region.

Blue Power’s problem is that much of its traditional business sits in price-sensitive categories, leaving limited room to simply pass the higher cost on to consumers.

Tolan said the company remains the regional market leader in value-based bar soaps, including blue laundry, carbolic and traditional castile soaps, but those categories “have not presented significant opportunities for price increases”, particularly against the backdrop of Hurricane Melissa, which hit sections of Jamaica last October, and its effect on the cost of living and consumer confidence.

Instead, he said the company has had to attack the cost side of the business.

“Accordingly, the business has undertaken a series of continuous improvement projects to drive cost efficiency, improve raw material sourcing and plant productivity,” Tolan said.

He added that Blue Power has relied on those productivity measures to maintain profitability despite the tariff burden and the knock-on effect of higher global shipping costs.

But that pressure has already hit Blue Power’s margins hard. Revenue for the three months ended July 31, 2026 slipped 2.7 per cent to $225.4 million, from $231.7 million a year earlier. Gross profit fell much faster, to $54.7 million from $77.9 million, while profit for the quarter was reduced to $1.2 million, compared with $28.4 million in the corresponding period last year. That pushed gross margin down to about 24.3 per cent from 33.6 per cent a year earlier. Revenue for the year ended April 30, 2026 fell to $814.1 million from $963.5 million, while profit attributable to shareholders declined to $60.2 million from $136.8 million.

In reporting the quarter, Blue Power said it was feeling the “full brunt” of the 40 per cent tariff and higher shipping costs, although the initial launch of higher-margin specialty and functional plant-based soaps helped cushion some of the pressure.

The company is now moving more aggressively into products it believes can carry better margins.

“The next phase of the turnaround involves the expansion of more innovative and premium product categories including medicated soaps and natural soaps, plant based soaps and cold processed soaps using specialized formulations,” Tolan said.

He said the company is working with experienced brand partners and distributors to get those products into the market, with launches and sales growth targeted for the current financial year.

“The key new product launches and sales growth from these new product lines is targeted for this financial year and is on track,” Tolan said.

Blue Power’s push into new products is being matched by an expansion of its manufacturing space.

The soap manufacturer has purchased lands at 3 Victoria Avenue, beside its existing operation at 4 Victoria Avenue, giving it additional production and warehousing capacity.

“The additional space will immediately allow the company to expand its manufacturing footprint with a particular focus on innovative product lines,” Tolan told the Business Observer, though he did not disclose how much Blue Power plans to spend on the expansion or how far construction has progressed.

He added that the property will also give the company room to diversify beyond bar soaps over the medium term. Blue Power had already announced plans last year to enter the liquid soap market.