Paramount Trading (Jamaica) Limited recorded net profit of $53 million in its last financial year despite severe supplier dislocation and unpredictable market conditions since March.
The chemical raw materials supplier, in its recent financials, said a pivot towards sanitation products helped to stem possible negative impacts.
Paramount’s after-tax profit of $53 million for the year ended May 31, 2020, was $9.6 million less than the previous year.
Earnings per share were $0.034, down from $0.040 for the previous year.
Directors outline that in fourth quarter Paramount begun pivoting its business into the manufacturing of sanitation-related products.
They state, “Taking advantage of the window of opportunity created by our entry into the sanitation products market, we reduced the negative impact of COVID-19 and generated revenue of $1.52 billion, which was slightly below our prior year earnings of $1.59 billion and a negligible decrease of five per cent.”
This resulted in reduced gross profit of $468.2 million, compared with $501.9 million in the previous year.
Food grade and technical grade portfolios saw revenue growth of two per cent and five per cent respectively.
New products include hand sanitiser and surface cleaners which generated revenue of over $43 million for the technical grade division during the last quarter.
The lubricant division, although the main growth driver, suffered setback due to the country-wide closure of non-essential businesses during the fourth quarter.
This resulted in a 20 per cent reduction in divisional revenue year on year.
Company operating expenses of $385.7 million showed a positive variance of nine per cent over the prior year, a reduction driven primarily by a decrease in administrative costs, moving from $401.8 million to $366.9 million.
On the other hand, finance costs climbed by over 107 per cent as a result of capacity build-out funded mainly by preference shares and increase in debt.
Cash and cash equivalent showed an increase of $133.0 million, which bolstered company liquidity.
Long-term borrowings at year-end were at $126.2 million, an increase of $77.9 million, but directors said the company is “well within its capital adequacy requirements and conventional gearing ratio.”
They outlined that it will continue to build out its productive capacity. Renovation activities have started on the bleach and chlorine plants and will continue into the new financial year.
Management also said the company will expand sanitation products and continue pursuit of contract manufacturing in the Lubricant division.