Blue Power protects Guyanese market from Dominican competition

BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com

Friday, June 22, 2018

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Soap manufacturing company Blue Power has beefed up supplies in the Guyanese market, in addition to securing a contract with a Florida-based distributor as part of efforts to protect its revenue stream from unfavourable variances that could occur with the reopening of Dominica Coconut Products.

Blue Power currently exports laundry soap to the United States, England, Barbados, Grenada, the Dominican Republic, St Lucia and Guyana, and has recently seen an uptick in sales following the closure of soap manufacturer Dominica Coconut Products in 2015. The company was severely affected by flooding as a result of heavy rainfall associated with the passage of Tropical Storm Erika.

Dominica Coconut Products reopened last August after a Dominican businessman had negotiated a loan to purchase it from Colgate Palmolive.

Blue Power Chairman, Dhiru Tanna, however, managed to tap into some of Dominica Coconut's market share by cutting profit margins.

“We continue to prepare for the competitive pressures we will face as the factory in Dominica, which had been closed down, is reopened under new management and a new plant has been installed in Jamaica,” Tanna said in a note to shareholders in Blue Power's financial report for the year ended April 30.

Blue Power has increased its supply of soap in the Guyanese market from the introduction of new products for which it has contracted a new distributor.

“We started shipping that new brand already, so if we get things like this going, then presumably it will maintain our market share and maybe improve it,” Tanna told the Jamaica Observer.

For the short term, Tanna disclosed that the company will not be looking to increase prices in Dominican Republic so as not to give the competition any advantage. However, the chairman will, come July, begin a review on the prices of products on the local market as the Jamaican dollar devalues against the US currency.

“I may have to look at prices again, but the Bank of Jamaica said the Jamaican dollar will again strengthen against the US and they are not worried. So I'm just waiting and seeing; if it doesn't change then we will have to review prices, but that is not going to happen this month,” he told the Caribbean Business Report.

For the year ended March, Blue Power's financial statements show sales improving eight per cent from $1,395 million to $1,508 million, with the Lumber Depot Division showing an increase of 12 per cent while sales from the Blue Power Division remained flat year over year.

Tanna reasoned that in the previous period, profit was bolstered by significant benefits due to changes in the exchange rate. However, the increase in sales this year was not accompanied by any gains in net finance income, which was almost $21 million in 2016/17 compared to almost zero in the year under review.

“As a direct result of this, on a comparative basis, net profit after tax declined by 16.25 per cent from $122 million last year to $102 million this year,” he said.

Earnings per share also declined from $2.16 to $1.81.

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