BPOW reports 34% decline in nine months net profits

March 04, 2020


BPOW for the nine months ended January 31, 2020 revenues declined by 10% to $342.46 million relative to $380.60 million recorded in 2019. For the third quarter, revenue marginally increased 1% from $110.20 million in 2019 to $111.03 million in 2020. Management highlighted, “Blue Power Group’s revenue is now derived from manufacturing, rental of property and provision of management services to Lumber Depot Limited.”

Additionally, BPOW noted “Export sales declined during the quarter from $27.6 million to $22.4 million but other income increased from zero to $6.8 million. The reason for the decline in exports is the ruling by Jamaica Customs that the tariff classification we have used for the last 19 years for our raw materials of noodles is not acceptable. This recent change reduced our price competitiveness in CARICOM which resulted in a loss of some sales”

Cost of Sales for the period decreased by 12% to $217.52 million (2019: $246.77 million). As such, gross profit declined by 7% to $124.94 million (2019: $133.83 million). For the third quarter, cost of sales marginally declined by 1% to $73.41 million (2019: $74.26 million); consequently gross profit for the quarter increased 5% to $37.62 million (2019: $35.94 million)

Administrative Expenses amounted to $111.39 million, a 65% increase relative to $67.69 million recorded in the last corresponding period. Consequently, Operating Profit totalled $13.55 million, 80% less than the $66.14 million booked for the prior year’s period.

Notably, other income surged to $12.75 million versus $445,242 documented in the same period last year. For the quarter, other income closed at $6.83 million (2019: nil).

Finance Income amounted to $25.01 million (2019: $10.18 million) while Finance Cost totalled $662,230 (2019: $388,210) for the nine months period. As such, Profit before taxation decreased by 34% to $50.65 million relative to $76.37 million for the corresponding period last year.

The company reported a 32% decrease in taxes paid year-to-date to $6.33 million compared to the $9.28 million paid for the same period last year. Consequently, Net Profit declined by 34% to $44.31 million (2019: $67.09 million). Net loss for the quarter totalled $7.27 million relative to net profit of $13.85 million booked the prior year’s quarter.

Profit attributable to members totalled $65.61 million for the period versus $119.97 million reported in the same period last year as a result of profit from discontinued business of $21.30 million (2019: $52.87 million).

The company noted, “Lower levels of soap sales in the third quarter coupled with substantial one-off costs of $27 million incurred in making redundant the non-supervisory staff of the Lumber Depot division is the explanation for the negative results in terms of profits.”

Additionally, BPOW highlighted, “Management and the Board are exploring all avenues for restoring our exports to CARICOM which constitute about 20% of our sales.”

Earnings-per-share for the period amounted to $0.12 (2019:$0.21), while loss-per-share for the quarter amounted to $0.01 (2019: EPS $0.06). The twelve month earnings-per-share amounted to $0.07.The amount of shares used in our calculation is 564,990,000. Notably, BPOW stock price closed the trading period on March 03, 2020 at $4.56.

Balance Sheet Highlights:

The company, as at January 31, 2020, recorded total assets of $1.02 billion, an increase of 3% when compared to $985.02 million recorded last year. This was as a result of the Company booking ‘Investment’ and ‘Cash and cash equivalents’ of $269.01 million (2019: $218.19 million) and $206.62 million (2019: $181.79 million). This was however tempered by the $138.59 million decline in ‘Inventories’ to $161.31 million (2019: $299.90 million).

Total Stockholders’ Equity as at January 31, 2020 closed at $951.26 million (2019: $871.97 million). This resulted in a book value of $1.68 (2019: $1.54).

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