Blue Power deepens services to demerged Lumber Depot
Published:Wednesday | March 17, 2021 | 12:13 AM
Soap maker Blue Power Group Limited and its spin-off company, Lumber Depot Limited, are both growing at a double-digit levels, despite the ongoing pandemic.
That’s because they sell sanitation and construction products, which market segments that have seen steady demand when others have declined.
In fact, both earned roughly the same profit in dollar terms for their third quarter ending January 2021. Blue Power grew profits to $33 million, reversing a $7-million net loss a year earlier, while Lumber Depot’s earnings climbed by 55 per cent to $34 million.
The Blue Power company grew its revenue by 61 per cent in the quarter to $179 million while Lumber Depot grew revenues at 13 per cent in the quarter to $353 million.
Lumber Depot was demerged from the Blue Power Group in August 2019. But the soap maker continues to provide management services to its former hardware unit. It is also now sourcing lumber on Lumber Depot’s behalf.
Blue Power saw its export sales more than double during the quarter from $22 million to $53 million while other income remained relatively the same as in the previous year. A significant portion of the increase came from exports to Caricom markets.
During 2020, exports of soaps were hit with increased duty to enter the region, due to an ongoing trade dispute between Jamaican soap makers and the Dominican Government on behalf of soap makers in that country. It resulted in Caricom’s Council for Trade and Economic Development, COTED, reportedly slapping a 40 per cent duty on these soaps, resulting in them losing their duty-free access to Caricom based on buying inputs from Asia.
“Management and the board are exploring all avenues for restoring our exports to Caricom, which constitutes about 20 per cent of our sales. The loyalty of our customers in both the domestic and export markets is strong and we hope they will bear with us while we navigate the rough times,” said Blue Power chairman and founder, Dr Dhiru Tanna, in the financial report.
“Within Jamaica, we added a new revenue stream from sales of lumber and plyboard imported for sale to Lumber Depot,” he said.
Chairman at Lumber Depot, Jeffrey Hall, noted in that company’s financial report that despite the pandemic and the ensuing restrictions on movement, the company found ways to grow.
“During the period under review, a major area of focus for us was to maintain consistent inventory levels in all of the key hardware supplies – including lumber, steel and cement products – regardless of the factors affecting production and transportation of these items,” stated Hall.
Over nine months, Lumber Depot made $101 million and grew its capital base to $279 million. Blue Power Group made $83 million in the same period, and grew its net value to $1.1 billion.