Revenues drops 23% to $116 million during fourth quarter

Jamaican soap manufacturer, Blue Power Group Limited has been hit hard by the suspension of exports to the CARICOM region with revenues for the fourth quarter ended July 31, 2021, falling by 23 per cent.

Total revenue amounted to $116 million, down from the $150 million realised in the previous year, due mainly to the suspension of soap exports to the CARICOM region. This was due to the fact that the Jamaican Government discontinued the issuance of Certificates of Origin for soap manufactured in the country with imported soap noodles, as a result of a ruling by late last year by CARICOM’s Council for Trade and Economic Development (COTED).

This majority decision by COTED last November required the Jamaican authorities to cease issuing the certificates of origin to Jamaican manufactured soap. This action was taken after regional soap producer, Dominica Coconut Products Successors (DCPS) Limited lodge a complaint with COTED citing unfair competition.

DCPS argued that the soap pellets raw material imported from Indonesia by Jamaican producers was simply reshaped as soap without going through a process of manufacturing transformation that the Dominican firm contends is necessary for the finished goods to be classified as being of CARICOM origin. Those goods benefit from the non-imposition of the 40 per cent common external tariff that goods of non-community origin attract.

Blue Power earns its revenue primarily from the production and sale of soap for Jamaica and export markets. The business earns additional income from property rental and warehousing services, as well as management fees, interest and dividends.

Blue Power strategising on the local and exports market

Blue Power Chairman Dhiru Tanna says the company is working on a number of strategies to grow its domestic and export soap markets.

Tanna advised shareholders that, “looking forward, we are pursuing a number of avenues to improve our product portfolio, marketing and sales in the domestic and non-CARICOM markets while also taking steps to regain our markets in CARICOM countries over time”.

Referring to the loss earnings due to the suspension, Tanna explained that profits from operations for the first quarter amounted to $8 million compared to $21 million in the previous year, a decline of 62 per cent. The business earns additional income from property rental and warehousing services, as well as management fees, interest and dividends.

The Blue Power chairman disclosed that the company took the opportunity of selling a small portion of its investment holdings to realise a gain of $26 million, which resulted in after tax profit attributable to members of $46 million and total comprehensive income of $69 million after taking into account the appreciation of its overall investment holdings during the period.

Regarding the recent lawsuit filed against four agencies of the Government of Jamaica and Blue Power by DCPS, Tanna mentioned that his attorneys have already filed their preliminary defence.

The Blue Power chairman remarked that, “at all times, we have abided with the laws of Jamaica in terms of importation of our raw materials and exports of our finished products and of course we will continue to do so. Our approach to the development of the Blue Power Group’s product line and markets is also entirely consistent with Jamaica’s development goals and strategic objectives for its emerging manufacturing and logistics sectors”.