Jamaican lighting company FosRich experienced a bumper first quarter ended March, with net profits soaring by 697 per cent to $38.4 million.
The profit made for the comparable first quarter last year was a mere $4.8 million. Revenues are up 22 per cent to $549.2 million coming from $448.8 million in the first quarter of 2020. Gross profit for the period under review was $191.7 million, up 13 per cent from $169.9 million in the prior period .
These increases in revenue and profit were attributed primarily to higher sales in seven of FosRich’s 11 product groups, namely: Electrical Lighting, Hardware, LED, Panels, PVC, Solar and Wiring Devices.
Contraction in administration expenses
During the quarter FosRich was able to contain its administration expenses, as the year-to-date administration expenses amounted to $143.6 million, reflecting a reduction of $2 million on the $145.6 million booked for the first quarter of 2020. The cut in expenses was driven primarily by reductions in legal and professional fees and computer expenses.
There were increased staff related costs for salary adjustments, increased sales commission due to improved sales performance and improvements in staff benefits, increased motor vehicle expenses and increased occupancy costs, due to the commencement of obligations in January for the second Hayes factory building.
Finance cost for the year-to-date was $24.8 million compared to $26.2 million for the prior reporting period, a reduction of $2 million. This reduction is being driven primarily by reductions in amortizing facilities.
Balance sheet inventories
The company continues 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. Inventories have remained stable over both periods.
FosRich continues to closely manage receivables with an emphasis being placed on balances over 180 days. The lighting company has implemented strategies to collect these funds as well as to ensure that the other buckets are managed.
More than half (68.5 per cent to be precise) of receivables are within the current to 60 day category. Despite staff shortages resulting from quarantine measures dictated by the authorities, FosRich has managed to keep all its stores open.
According to FosRich, “we continue to adopt and implement all of the safety measures being promulgated by the Government of Jamaica. We are cognizant that despite the challenges ahead within this operating space, that we have the right talents and leadership to deliver on our plans for the ensuing period. We will continue to execute on our plans to ensure that we remain competitive and deliver value solutions to our customers.”