The loss of its CARICOM market and one-off costs associated with redundancy exercises has resulted in a third quarter loss for Blue Power Limited.
Loss from operations was $20.7 million which resulted in an overall loss of $7.3 million for the quarter.
For the nine months to January 31, the company posted net profit of $65.61 million, down from $119.96 million for the similar period in 2019.
Earnings per share at January 31 were $0.12 for the nine months compared to $0.21 for January 2019.
“The loyalty of our customers in both the domestic and export markets is strong and we hope they will bear with us while we navigate the rough times.”– Chairman Dhiru Tanna
Chairman Dhiru Tanna, in statements attached to the results for the quarter ended January 31, 2020 said lower levels of soap sales in the third quarter coupled with substantial one-off costs of $27 million incurred in making redundant the non-supervisory staff of the Lumber Depot division was the explanation for the negative results in terms of profits.
Blue Power Group’s revenue is now derived from manufacturing, rental of property and provision of management services to Lumber Depot Limited which was spun off in 2019.
For the third quarter, revenue was $111 million compared to $110 million in the previous year, a marginal increase.
However, export sales declined during the quarter from $27.6 million to $22.4 due to the ruling by Jamaica Customs that the tariff classification we have used for the last 19 years for our raw materials of noodles is not acceptable.
Chairman Tanna commented, “This recent change reduced our price competitiveness in CARICOM which resulted in a loss of some sales.”
He said losses were cushioned somewhat by the devaluation of the currency which had a positive effect on the results for the third quarter. Additionally, other income increased from zero to $6.8 million.
Tanna noted that the company is “exploring all avenues for restoring our exports to CARICOM which constitute about 20 per cent of our sales. The loyalty of our customers in both the domestic and export markets is strong and we hope they will bear with us while we navigate the rough times.”
Blue Power spun off its lumber division last year with a transfer of assets and liabilities of the Lumber Depot division to a company called Lumber Depot Limited on August 1, 2019.
The new entity was listed on the Junior Market of the Jamaica Stock Exchange on December 13, 2019, after raising additional capital of $169.5 million at an IPO price of $1.20 per share.
Results for the nine months from continuing operations show a profit of $50.1 million before tax and $44.3 million after tax. However, swollen administrative expenses caused by one off costs associated with paying off staff resulted in the recorded loss.