September 14, 2022
Blue Power Group Limited (BPOW) for the three months ended July 31, 2022, revenues increased by 85%, year over year, totalling $214.26 million (2021: $116.10 million). Management noted, “We experienced revenue growth in all of our main product categories including our bath soap lines, specialty soaps and our laundry soap business. Revenue growth came from existing and new customers and saw the group gaining market share locally and re-enforcing its reputation as a leading private label manufacturer.”
Cost of Sales for the quarter rose 155%, moving from $66.59 million in 2021 to $169.99 million for the period under review. As such, Gross Profit amounted to $44.27 million, an 11% reduction on the $49.51 million recorded for the three months ended July 31, 2021.
Administrative Expenses for the quarter rose 5%, totalling $45.22 million relative to last year’s $43.04 million. Impairment losses on trade receivables amounted to $8.17 million relative to last year’s impairment gains of $1.63 million.
BPOW reported $10.50 million for Other Income for the first quarter relative to $36.45 million recorded for the corresponding period in 2021.
Finance Cost of $798,694 was recorded for the first quarter compared to a finance cost of $365,899 in the year prior, while Finance Income totalled $518,857 relative to the $9.29 million for the same quarter in 2021.
Consequently, Profit before taxation reflected an 84% decrease year over year to $8.30 million versus $53.39 million booked for the prior year’s corresponding quarter.
After taxation of $1.38 million (2021: $6.98 million), Profit from continuing operations for the first quarter amounted to $6.92 million compared to $46.41 million, an 85% decrease year over year.
Management noted, “our gross margins suffered as a result of dramatic increases in raw materials prices, challenges to the actual availability of products from some of our sources, and a spike in logistics costs (particularly for products originating in Asia). The market for vegetable oils – a basic input in soap production – was disrupted in the early part of the calendar year due to the war in the Ukraine. Logistics costs were affected by the impact of COVID on the global supply chain. Our key inputs have long lead times for procurement and shipping and although the market has now clearly showed signs of normalizing, our First Quarter margins were adversely affected. The combined effect of these challenges was a reduction in net profits from $46 million in the prior year first quarter to $7 million this year.”
Earnings per share for the quarter totaled $0.01 (2021 $0.08), while for the trailing twelve months EPS was $0.27. The number of shares used in this calculation was 564,990,000. Notably, BPOW’s stock price closed the trading period on September 13, 2022, at a price of $3.74 with a corresponding P/E arti of 13.72 times.
BPOW also indicated, “an important part of our plan for profitable business growth, is our commitment to efficiency and innovation. During the quarter we continued our capital projects to expand our capacity and productivity and to give our manufacturing plant more flexibility in the sources of raw material. We expect to see the results of this investment in the second half of 2023. We also secured the long-term expansion prospects for the business with the acquisition of a two-acre plot of land that is adjacent to our existing facility. The site includes a building that is suitable for renovation as well as land space with excellent development potential for a purpose-built industrial facility. We expect to complete our development plan for the property during the course of the year.”
Balance Sheet at a glance:
As at July 31, 2022, total assets amounted to $1.55 billion, up 10% million from the balance of $1.41 billion a year prior. The largest contributor to the increase in ‘Investment’ which closed the quarter at $253.19 million (2021: nil). Property, plant and equipment recorded a 118% growth to $334.97 million compared to $153.84 million twelve months earlier.
Shareholders’ Equity increased by approximately 8% amounting to $1.44 billion (2021: $1.33 billion) with a book value per share of $2.54 (2021: $2.35).
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