Jamaican listed solar energy and lighting company, FosRich Limited is reporting a big jump in profits for the nine-month period ended September 30, 2021, or year-to-date.

Net profit for the period is up by 138 per cent to $179 million, which is an increase of $104 million coming from $75 million for the corresponding period in 2020. Revenues for the period under review totalled $1.68 billion, which is an increase of $294 million or 21 per cent from the $1.39 billion in the prior period •

Revenues for the September quarter amounted to $593 million, which is up $59 million or 11 per cent from the $534 million reported during the corresponding period in 2020. Net Profit for the quarter is up by $12 million or 22 per cent to $65 million coming from $53 million in the prior period

Income year-to-date

Year-to-date income was $1.68 billion, compared to $1.39 billion for the prior period, representing an increase of $294 million. Gross profit for the year-to-date is $671 million, compared to $554 million for the prior reporting period.

This represents an increase of $117 million. These increases were attributed to actual growth in the volume of sales, increases in commodity prices and the greater availability of the products required by the market. While the overall increase in revenues was 21 per cent, the product lines that had significant increases were solar which saw increases of 116 per cent, hardware 79 per cent, control devices 66 per cent and PVC 50 per cent.

Its third quarter was the best enjoyed in FosRich’s operating history as a company generated income of $593 million, compared to $534 million for the prior reporting period, representing an increase of $59 million.

This increase was achieved despite the reduced number of days that the stores were opened in August, due to the increased number of lockdown days enforced by the government as part of their COVID-19 strategy. Sales for August were $100 million below the amount achieved for July. Gross profit for the quarter was $236 million compared to $216 million for the prior reporting period.

Administration expenses increased

Administration expenses for the year-to-date amounted to  $479 million, reflecting an increase of $43 million on the prior reporting period amount of $436 million. The changes were driven primarily by increased staff-related costs for salary adjustments, increased sales commission due to improved sales performance and improvements in staff benefits, increased staff training cost with the launch of the new FosRich Corporate University.

These activities resulted in increased marketing expenses, motor vehicle expenses, increased occupancy, cost due to the commencement of obligations in January for the second Hayes factory building and increased depreciation and amortization charges. However, there were reductions in legal fees.

Finance costs for the year-to-date were $79 million compared to $76 million for the prior reporting period, an increase largely due to a jump in the company’s loan facilities.

Inventories affected by global supply chain problems

The company’s forward purchasing arrangements have been affected by the now global supply chain problems associated with trans-shipment availability and escalating costs. This current problem is affecting both FosRich’s North American and Asian suppliers.

According to the company’s management, “We, however, continue to closely manage inventory balances and the supply chain, with a view to ensuring that inventory balances being carried are optimised, relative to the pace of sales, the time between the orders being made and when goods become available for sale, to avoid both overstocking and stock-outs. Monitoring is done both at the individual product level and by product categories. Sales in most categories remain strong and reflect increases over the prior year.

The management remarked that FosRich would continue to monitor the effect of the COVID-19 pandemic on its customers buying patterns.  With the increases in sales has come an uptick in receivables.

Of note is the fact that there has been a reduction in the proportion of cash sales to total sales made in the current quarter. FosRich says it will continue to closely manage trade receivables with an emphasis being placed on balances over 180 days.

In addition, the company has implemented strategies to collect these funds as well as to ensure that the other buckets are managed. As a result of the anticipated impact of COVID-19 on its customers, the Molynes Road-based company has reviewed all credit arrangements.

Where necessary FosRich has reduced credit limits with credit periods being shortened and, for some items, the company has instituted seven-day credit or cash.