Paramount sales pinched by overstocked customers
Sales at chemicals company Paramount Trading Jamaica has fallen off by nearly $100 million at half-year, with much of the impact felt on the lubricants side of the business due to changes in travel patterns and volumes under the pandemic.
And while economic and market conditions are slowly turning around, the initial movement towards stocking up on extra supplies to fight the pandemic has led to drop in current demand for some Paramount products, its CEO Hugh Graham has said.
Paramount’s sales dropped by 13 per cent to $668 million over six months ending November 2020, putting additional pressure on its bottom line, which shrank by half from $39.5 million to $19.7 million.
“We weren’t wiped out but the impact of not having vehicles on the road, therefore not requiring lubes and so on, was a tough one for us. Also, schools were out so the institutional sales for sanitation, which was a big chunk of our business, that was not there,” he added.
Two new contracts have helped offset some of the downswing, according to Graham, who is still running his company even after winning a seat in the House of Representatives. Paramount won the bid for the contract to supply sanitisers for the September 2020 general election, in which Graham was elected as a member of parliament on the opposition party’s ticket; as well another contract to supply sanitisers to schools for the CSEC examinations.
“You would call the items we supplied a finished product, which would not be a part of our original business. This is opening a new revenue stream for our company,” Graham said.
Paramount trades in industrial grade chemicals for use in sanitisation, construction and manufacturing. In addition, it manufactures bleach and other cleaning agents for other companies, which in turn distribute to the retail trade.
Paramount’s second quarter, September to November, performed worse than its first, with revenue down 25 per cent to $306.6 million in the second period.
“This is really a sort of delayed or residual effect of the COVID challenge. There are instances of companies stocking up in anticipation of the crisis and they are left with so much inventory that they are not purchasing from us although things are reopening,” Graham said.