Freed of taxes, Blue Power profit blossoms
Published:Friday | December 17, 2010 | 12:00 AM
Despite a sharp uptick in the cost of its operations at the factory floor and elsewhere in the company, Blue Power Group Limited has reported a 77 per cent jump in its second-quarter net profits, to J$8.4 million.
No tax was charged to its profit for the quarter, courtesy of the 10-year holiday afforded newly listed junior stock market companies - a full waiver in the first five and 50 per cent in the next.
The company has been listed for less than eight months - six at the close of its October second quarter.
The six-month results also recorded a drop in taxes paid by 87 per cent, to J$990,000, related to prior year adjustments, from J$7.4 million in the corresponding period last year.
Net profit in this period rose from J$14.8 million to J$16.6 million at October 2010.
While Blue Power, which manufactures laundry and bath soaps and retails building materials, showed an increase in expenses, it still managed to boost revenue figures.
Revenues for the three months to the end of October increased by 18 per cent to J$180 million, from J$152 million in the previous period, but administrative and other expenses climbed even more sharply, by 21 per cent, from J$19.4 million to J$23.6 million; while cost of sales grew by 17.5 per cent to J$147.6 million, up from J$125.7 million.
For the six-month period, revenue expanded 15 per cent to J$366 million, the bulk of which was earned by the lumber division. Lumber contributed 73.5 per cent to revenue and 66 per cent to net profit. Its soap division accounts for the other 16.5 per cent of revenue and 34 per cent net profit.
In line with the company's expansion plans, capital of J$3.7 million was invested in the purchase of property, plant and equipment, up from J$1.7 million in the corresponding period.
While it was not stated in the financial results, at the time of its initial public offering, Blue Power had stated that equity capital was needed to finance expansion of its soap-manu-facturing business.
"We have expanded our building, put in new machines, mills and are now in a position, if the demand picks up, to supply the products," Dhiru Tanna, managing director of Blue Power Group, told the Financial Gleaner this week.
"For the laundry soap, we can manufacture close to 50 per cent more, while for bath soap we almost doubled our capacity," he said.
So far, the company has launched new soaps on the market under its own brand, as well as for companies such as Lasco, for which it produces soaps under contract.
Blue Power occupies 8,500 square feet of space in a 20,000-square foot complex at Victoria Avenue, which houses its manufacturing operations. The lumber depot operates from Papine.
Blue Power, which went public earlier in the year and listed on the junior exchange in April, has a net book value of J$168 million, or J$2.97 per share, and a stock market value of J$268 million, or J$4.75 per share.