FosRich associate secures parts deal, to manufacture electrical transformers
Published:Sunday | August 18, 2024 | 12:08 AMNeville Graham - Business Reporter
Blue Emerald, a manufacturing affiliate of FosRich Company Limited, has secured a contract to make transformers in Jamaica, deepening its operations that to now has dealt with repairs of the equipment for key client, Jamaica Public Service Company Limited.
FosRich CEO Cecil Foster said Blue Emerald has signed a deal with UniTrans Power, under which the company, which operates out of Gujarat, India, will be supplying inputs to make transformers in Jamaica at the Blue Emerald facility at Hayes, Clarendon. UniTrans designs and manufactures customised transformers.
“They’re going to be working with us over the next six to eight months, supplying components, adding their expertise to our expertise to start making transformers in Jamaica,” Foster said in an interview with the Financial Gleaner. UniTrans will be supplying cores, copper wire, lightning arrestors and isolators, among other components, he said.
Blue Emerald has been repairing transformers for JPS, since last year. The company plans to expand that element of the business by seeking out other clients from within the Caribbean, where Foster said a lucrative market for new and repaired transformers awaits.
“The Caribbean is waiting on us. It has about three million transformers. They’re waiting to be serviced and at least 10 per cent of them need to be replaced every year,” Foster said.
Blue Emerald is an associate company of FosRich, which owns 20 per cent. Foster and his wife Marion Foster own 70 per cent, while the other 10 per cent of the shares are held by senior management at FosRich. The Blue Emerald operation is located at leased premises at Hayes, Clarendon. The company repurposed 120,000 square feet of covered buildings on seven acres of land to have a twin operation, with one side manufacturing PVC pipes and fittings, while the other side deals with electrical transformers.
Foster said 100 per cent of the output at Blue Emerald is contracted to FosRich.
FosRich Company, which itself is in the business of making pipes, distributing electrical and energy products, and retail hardware, is expecting the developments at Blue Emerald to translate into additional income for it over the next 12 to 24 months, Foster said.
FosRich needs this fresh stream to boost sagging revenues.
During the second quarter ended June 2024, the company reported $885 million in group sales, down from $941 million for the similar period in 2023. However, earnings were marginally better at $45 million, up from $41 million in the 2023 period.
Foster said he expected the recently acquired Bayside Hardware and Supplies to boost top-line income.
Half-year revenue amounted to $1.74 billion, down from $2.02 billion for the similar reporting period in 2023. Both shipping and commodity prices were higher in previous years and those prices pushed up both revenues and cost of revenues, Foster said.
“As we observed at the end of the year 2022 coming into 2023, there was an upward movement of prices for transportation and procurement. Those prices had to be passed on. Those prices are substantially down and because of competition and market conditions, we’ve had to reduce those prices and that is reflected in our revenue numbers,” he told the Financial Gleaner, adding that the company still managed to sell similar volumes but total sales income was affected by lower prices.
“Pipes were two times the price that they are right now, and freight was about four times the price that we’re paying. Those costs had to be passed on,” he said.
FosRich’s sales also suffered from a slowdown in the construction sector, particularly housing starts for NHT-funded projects and to a lesser extent private sector funded projects. National Housing Trust is a primary developer of housing that’s operated by the state.
“The private sector business has not gone down as badly as the NHT, which went down by about 54 per cent while private sector went down by about 15-20 per cent. Despite this we continued to hold our own,” Foster said.
Speaking from overseas as he tied up supply contracts, particularly for the hardware division, Foster said that all was being done to outfit the Montego Bay acquisition so that it can be ready for the market and fulfil hardware contracts in western Jamaica.