Allegheny Petroleum

Paramount’s lubricant plant in operation

March 31, 2018 by IC Insider.com

New Lubricant plant at Walton Park Road

Profit at Paramount Trading, jumped 137 percent to $34 in the first quarter to August last year, but declined by 35 percent in the November quarter, to $24 million from $37 million in 2016.
For the six months to November, profit rose only 13 percent to $58 million from $51 million in 2016. Sale revenues rose 28 percent for the November quarter, to $257 million from $200 million in 2016 and increased 31 percent for the year to date, to $487 million from $370 million in 2016.
The board of directors in their report to shareholders accompanying the quarterly, stated that “our lubricant business line produced strong sales during the quarter when compared to the last year growing $28 million or 261 percent and by $41.6 million with a 248 percent increase year to date. Technical grade product sales grew by $47 million or 137 on quarterly basis and $83 million or 133 percent year over the period year. We expect this trend to continue into the last two quarters.”

Processing and storage tanks inside factory.

Profit margin declined in the November quarter to 28 percent from 30 percent in the 2016, and slipped to 29 percent from 31 percent for the year to date period. The effect, gross profit rose 15 percent in the quarter to $99 million from $86 million and 19 percent for the year to date, to $200 million from $169 million in 2016.
While revenues rose solidly, so did administrative expenses that jumped 47 percent to $72 million in the quarter and increased 13 percent in the six months period to $121 million. Finance cost declined in the quarter, to a negative $2 million from $4 million in 2016 and from $7 million to $1.5 million for the half year.
Earnings per share came out at 1.5 cents for the quarter and 3.7 cents for the six months and should end the fiscal year ending to March around 25 cents with four months production and sales from the lubricant plant and the expanded chlorine and bleach operations.
Gross cash flow, brought in $72 million but growth in receivables, inventories, addition to fixed assets offset by loan inflows and reduced Payables wiped out the gains.

Another view inside of the factory.

Shareholders’ equity stands at $739 million with borrowings at just $77 million. Net current assets ended the period at $486 million, well over payables of $237 million. Inventories rose to $394 million from $320 million at the end of November 2016 and receivables climbed to $321 million from $238 million with cash and investments ending at $78 million.
The company commenced operation of the joint venture lubricant plant from around a month ago as well as production of bleach, an addition of a new product line. When the lubricant plant was announced in 2015, the estimate for revenues was in the US$5 million range but now that Alpart is reopened, the amount should rise.
The stock traded at $3.10 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 5.6 times IC Insider.com, 2019 earnings of around 55 cents per share.

Filed Under: Company News, Company Results Tagged With: Allegheny Petroleum, Alpart, Emerging markets, Jamaica Stock Exchange, Jamaican Stock, junior market, Paramount Trading

Paramount chops profits by $72M

July 31, 2017 by IC Insider.com

Paramount’s new look

Paramount Trading chops its 2017 profits by $72 million according to a release by the company published over the week end to $101 million. According to the release sales revenues climbed 12.8 percent to $1.156 billion for an increase of $132 million.
Gross profit margin declined by 2.1 percent cutting $23 million from profit compared to 2016 and operating cost rose 16 percent or $31 million from $193.8 million in 2016. “This resulted mainly from investments to build capacity to facilitate business growth in line with strategic direction of the company” the report stated. “The company will maintain a leading position in chemical raw materials, while accelerating growth in lubricants due to our investments in fixed assets including a joint venture with Allegheny Petroleum to manufacture oils locally the report went on to say.”
In the fourth quarter revenues grew 17.65 percent to $320 million from $272 million in 2016 and profit ended at $20 million in the 2017 final quarter versus $42 million in 2016. The final 2017 quarter results deteriorated sharply from performance for the February 2017 quarter, with revenues of $297 million and profit $29.5 million. The one year delay in starting to operate the lubricant plant has been costly. The profit result translates to only 6.5 cents per share. The stock last traded on the Junior Market of the Jamaica Stock Exchange at $2.99 per share with a PE ratio of 46.

Filed Under: Company News, Company Results Tagged With: Allegheny Petroleum, Jamaica Stock Exchange, junior market, Paramount Trading

Junior market legislation draft ready

August 15, 2016 by IC Insider.com

A Shaw address ptl Legislation is ready to come to parliament to make the junior market tax incentive retroactive to April 1, this year to restore the incentive to its original benefits of 100 percent tax-free status for 5 years and 50 percent of the regular tax for the second 5 years, Minister of Finance, Audley Shaw recently.
Shaw made the announcement when he delivered the keynote address at the official ground breaking of the Allegheny Petroleum and Paramount Trading joint venture lubricant factory in July to be built at 39 Waltham Park Road in Kingston.
Benefits far out weight the loss in revenues given up by the government, Shaw said. He stated that while corporate taxes were foregone, government saw increased intake from other taxes as a result of the expansion of junior market companies. He indicated that GCT intake grew by 337 percent by junior market companies, with NIS, NHT rising by 100 percent.
“Shaw went on to state that the time for fooling around is long past” we must chart a course to a better future urgently and commended the thrust Prime Minister Holness was pursuing to focussing on growth in an aggressive way. He said that “with 13,000 new hotel rooms to come on stream over the next 5 years that an avenue is being provided for additional goods for the sector to be provided by local goods producers for the sector.”
Shaw commended the joint venture partners and stated that is what he expects to see with a more economically friendly environment that should encourage local production for exports or import substitution.

Filed Under: Company News, Economy, General Business News, JSE Junior Market, Stock Market Tagged With: Allegheny Petroleum, Paramount Trading, Prime Minister Holness

Expansion for Paramount

August 15, 2016 by IC Insider.com

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PTL Lub Grnd bking Allegheny Petroleum and junior market listed company, Paramount Trading joined forces to establish their jointly owned lubricant plant to be housed at 39 Waltham Park Road the same site as Paramount other operating facility.
The plant for which ground was broken in July, is expected to replace imports amounting to approximately US$4 million now being supplied directly by Allegheny Petroleum, according to Hugh Graham, Managing director of Paramount.
Establishing operations in Jamaica, adds more value and will allow for a greater customer reach and create greater margins than that which applies to imports. The initial investment is US$4 million and includes the warehouse, equipment, software and lab testing equipment. The venture will have the capability to test lubricants in use for customers in Jamaica rather having to send samples overseas for testing. There are plans to expand product range in the future and provide products for exports. The plant is expected to start production in January next, Graham confirmed with IC Insider.
According to Graham in 2012, when they listed on the junior market, Paramount had 36 workers and now has 76 employees and the number will increase to 100 employees, with the latest expansion.
The ground breaking ceremony was addressed by Minister of Finance, Audley Shaw, who indicated that this venture vindicated the decision of the government to provide the tax incentive for the junior market as well as the economic policies being pursued that is geared to encourage more production of goods in Jamaica as opposed to relying on direct imports.
Robin Levy, assistant general manager of the Jamaica Stock Exchange indicated that the company has done well since it has listed and said “since listing in 2012 the company has gone on record higher revenues and tripled profit with the stock price rising from $2.45 to just under $11.” Since the ground breaking, the stock traded at $11.50 and now has a bid at $12.
In the year to May, the company posted an 18.5 percent increase in profit, to reach $173 million, from sales revenues of $1.02 billion with other income accounting for $39 million for the year, up from $869 million versus $16 million in 2015, respectively. Administrative, selling & distribution cost rose sharply by 34 percent to $181 million as the wage bill and rental expenses grew appreciably.
PTL All buid While profit grew in the year, segment results show mix out turn for each division. For 2016, Chemicals grew revenues by 12 percent and gross profit by 19 percent over 2015, for Construction and Adhesives, for the same periods, revenues grew by 59 percent and gross profit by just 6 percent. Manufacturing sales fell by 16 percent with profits remaining unchanged, while Transport enjoyed a 16 percent growth in sales leading to a 61 percent rise in profit and Lubricants sales climbed 403 percent with profits jumping 127 percent. Graham indicated to IC Insider that the fall in manufacturing sales is due to a customer reorganising their business. The data suggests that the new lubricant plant is likely to be the area of growth for Paramount.
In 2015, Graham indicated that a rights issue was likely, asked about that source of funding for the expansion, Graham stated “I can’t talk about that now,” he however, stated that “some other revenue announcement should be made soon.”

Filed Under: Buy Rated, Company News, Company Results Tagged With: Allegheny Petroleum, Audley Shaw, Jamaica Stock Exchange, Paramount Trading

Paramount eyeing new stock offering

November 22, 2015 by IC Insider.com

Junior market listed Paramount Trading will be heading back to the stock market soon to raise additional capital to help fund the US$4-million 50/50 joint venture lubricant manufacturing operation being done jointly with overseas-based Allegheny Petroleum, IC Insider confirmed with Hugh Graham, Chief executive of the company.
At the end of August the company had cash and investments of $165 million well below the cash injection that would be needed for their share of the capital.
“The advisory team is currently working out the capital needs to determine the amount we will go to the market for,” Hugh Graham stated in an interview with IC Insider. Graham stated, “manufacturing the lubricants locally provides higher margins as value added will be better than with imports, will create a better future for the operation and will allow for export of the finished product.”
Graham could not give the start-up date for the venture which is to be housed on property owned by Paramount as they await various approval from governmental departments.
In response to the reason why the company pumped up the dividend to 39 cents to be paid in November from 15.1 cents in 2014, Graham said “the board considered the dividend payment versus the profit realised and felt that investors should get a good return on their investment.” According the Graham, “the payment is $60 million which still left $90 million to add to accumulated profit”
While there might be a lot of truth in that statement, the plan for a rights issue could not have escaped the board with the low price the stock has been trading.
The 2015 payment represents 41 percent of profit and equates to a dividend yield of 14.89 percent based on the price of $2.62 at the start of the year. For the quarter ending August earnings grew 27 percent to 28 cent per share versus 22 cents in the same period in 2014.