Lighting and energy company FosRich delivered a more than commendable financial performance for 2022 with net profits and revenues climbing higher.
FosRich, which is a listed company and is primarily a distributor of lighting, electrical and solar energy products, saw its net profit in 2022 closing on J$325 million, up $126 million or 63 per cent compared to J$199 million in 2021. Revenues climbed by 43 per cent moving from J$2.35 billion in 2021 to close 2022 at J$3.37 billion, representing an increase of $1.02 billion.
Gross profit for last year was J$1.39 billion, up J$349 million or 33 per cent compared over the J$1.04 billion posted in 2021. Earnings per stock unit also climbed closing at J$0.06, which is J$0.02 or a 50% hike to the prior year’s J$0.04.
The product lines that had significant increases over the prior year were solar products, which grew by 96 per cent; control devices, which grew by 53 per cent; wires, growing by 48 per cent; PVC and LED products, which both grew by 37 per cent and industrial products & wiring devices, which both grew by 30 per cent.
Hit by price increases
During the year, FosRich experienced a mix of fluctuations in volume and price increases. Price increases were driven by escalating copper and PVC ingredient prices on the international market and increased shipping costs. There was a marked increase in administration, marketing and selling expenses, which closed the year at J$790 million, reflecting an increase of $158 million over the J$632 million booked in 2021.
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 occupancy cost, due to the commencement of obligations for its new Fulfilment Centre at 76 Molynes Road and disposal losses related to the early termination of the old 76 Molynes Road lease.
There were also increased selling and marketing costs; increased computer expenses; increased local travel and petrol costs; increased electricity cost; increased legal and professional fees; increased depreciation, due to increases in the carrying values of property plant and equipment and increased security expenses.
FosRich has a staff complement of over 170 persons across nine locations in Kingston, Clarendon, Mandeville, and Montego Bay. FosRich also has a team of energy and electrical engineers, who offer technical advice and install solar energy systems, solar water heaters and electrical panel boards.
Finance costs trimmed
The company experienced a mild saving on finance costs, which was contained at J$182 million for 2022 compared to J$185 million in 2021 for the prior year. This $3 million net decrease was driven primarily by reductions in receivables impairment provision of J$44 million.
The increased financing costs are a result of increased financing obtained to assist with the financing of operations. This new financing was obtained at more favourable rates than the previous bank facilities.
Global supply chain challenges easing
In his report to shareholders, FosRich’s managing director Cecil Foster points to the fact that global supply chain challenges, which rocked the company in 2021, eased much in 2022.
According to him, “the prior-year problems associated with global supply chain, trans-shipment availability and escalating shipping costs that affected both our North American and Asian suppliers, and that had a significant impact on our 2021 operations, did not have a significant impact on our operations for most of the current year.”
However, he points out that the lighting and energy company continues to manage inventory balances and its 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. Foster reports that monitoring is done both at the individual product level and by product categories.
He advises that sales in most categories remain strong and reflect increases over the prior year stating that the management continues to monitor the effect of the COVID-19 pandemic on its supplier markets and on its customers’ buying patterns.