2 weeks ago
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Paint maker Berger Paints Jamaica Limited said “significant and unforeseen global supply disruptions” caused a temporary break in product availability and order fulfilment in the June quarter.
General Manager Dwaine Williams said that like many industry leaders he was concerned about the challenges at the port and attendant costs, such as demurrage, the charge incurred when clearance of landed goods is delayed. In addition, the new tariffs imposed by the Trump regime in the United States are starting to bite.
“We’ve had surcharges being put on by some of our ingredient suppliers as well as the knock-on costs that they may be facing in their neck of the woods as well,” said Williams.
The on-again, off-again nature of the implementation of the tariffs by the US government has had a destabilising effect on the cost of imported goods, he said.
“That drove down margins somewhat, and lack of raw material for us,” said the Berger executive.
“Our business is a bit different from the regular FMCG type businesses, because, if I don’t get the complete mix of my raw materials, I can’t make paint,” Williams explained.
Consequently, Berger Jamaica’s revenue slipped from $791 million to $776 million for the second quarter ended June, a two per cent decline.
To counter the global supply disruptions and temporary constraints that affected production, Berger said it took steps to secure alternative raw materials and fast-track deliveries but it came at a higher cost.
“These proactive measures ensured business continuity and maintained customer service,” the company said in its second-quarter earnings report.
As a result of the short-term pressures, the paint maker closed the quarter with a net loss of $6 million, a slightly bigger dip that the $5.4 million loss reported in the June 2024 quarter.
The situation persisted for the greater part of the half-year but is now turning around, Williams noted.
“What we did was invest ahead in almost trying to ... shore up our raw material supplies for rest of year. So, we have one of the highest stock holdings the company has ever had, to try and safeguard against not having all the inputs,” he said.
Williams argues that with most of the raw materials having long shelf life, there is minimal risk of obsolescence or spoilage. Additionally, when the finished goods again also have about a two-year shelf life, he said.
Historically, Berger Jamaica has delivered better financial performance in the second half of the year.
“So, while that’s not how we want it, it does indicate we have proven that in the last half of the year, we can deliver significant throughput to change our fortunes, dare I say,” said Williams, who referred to the August-December period painting season.
“We invested ahead and focused on driving full product availability across the brands that consumers love, and going into the busiest time of the year for us, because the second half of the year is usually around just under 60 per cent of the full year’s performance,” he said.
Berger believes the construction sector has shrugged off the sluggishness observed at the end of last year, and is banking on business from large projects and contractors.
“There’s confidence and projects are being released. We’re looking to see how we can participate” in “that space to support the recovery,” Williams said.
English (US) ·