Paramount leans on household chemicals to cleanse its finances
Published:Sunday | August 8, 2021 | 12:05 AMNeville Graham - Business Reporter
Lubricants company Paramount Trading is looking to household chemicals and manufacturing to ride out the pandemic.
Paramount sells its chemicals to heavy or industrial-scale users, says CEO Hugh Graham, who in turn deal with institutions such as the airports, hospitals and schools.
“We sell precursor or bulk chemicals to interested parties. They in turn sell the end products or retail amounts to, say, schools and other institutions. If they have little or no business coming our way, then that affects us,” Graham said.
“We are in a pandemic and struggling to balance. The three-month shutdown, subsequent partial shutdowns and curfews hit us hard. Added to that is the fact that tourism and entertainment, a big chunk of our end-users, are not yet back to normal operations,” he said.
Despite being hit hard by the pandemic, Graham said Paramount was able to shore up the business from the income flowing from the chemicals unit.
The segment, which includes sanitisation products, accounts for over 56 per cent of revenue; up from 55 per cent in 2020.
Manufacturing activity at the company, whose core business pre-pandemic has been lubricants blending and trading, accounted for approximately 19 per cent of revenue, up from 17 per cent in 2020.
The realignment of revenue was made possible by acquisitions that came in handy, according to Graham.
“If you sign on to the maxim ‘never waste a crisis’, then the COVID-19 pandemic gave us a good opportunity to utilise those acquisitions we had done. It has left me saying that I never knew the day would come when the subject of chemicals would be sexy,” he said.
Paramount bought a bleach manufacturing plant from Seprod Limited in 2018, having previously acquired the Diversey chemicals manufacturing plant around 2014. Graham says the company also bought the Trade Well brands from Lascelles Jamaica, as they sold off assets during the changes in ownership of the Lascelles deMercado spirits conglomerate that owned the business.
Paramount’s business is organised under five operating segments: chemicals, construction and adhesive, manufacturing, transportation, and lubricants.
The five divisions together brought in just under $1.4 billion in revenues for financial year ending May 2021, a decline of five per cent from $77.9 million in 2020. But net profit was up 10.6 per cent, to around $64 million.
In their 2021 audit report, the company’s external auditors, McKenley & Associates, again cited the continued build-up of receivables, saying trade receivables, which reflect monies owed for goods supplied, amounted to $324 million, up from $243 million in 2020, with an impairment provision of $32 million, representing 9.7 per cent of the balance.
“The accounts receivable represents a credit risk with a profit after tax of $64 million (2020 - $53 million),” the auditors noted as a key audit matter.
Graham says, in some ways, the build-up in receivables is an investment in the survival of other companies that are also pressured by the pandemic.
“We would be out of order to dictate to the auditors but, in a pandemic, there are other considerations such as survivability of the businesses we deal with. We are of the view that those who owe us are not reluctant to pay but we just have to work with them till things get better,” Graham said.