Durrant Pate/Contributor

Jamaica-based lighting and energy company, FosRich is enjoying improved sales during its half-yearly period ended June 30, 2022, resulting in increased profitability.

The company experienced increased sales in 10 of its 11 product groups with panels being the only product group that registered a decrease over the period under review. During the June second quarter, FosRich generated income of J$899 million compared to J$544 million in 2021, representing an increase of J$355 million or 65 per cent.

Gross profit for the half year amounted to J$771 million, up J$336 million or 77 per cent from J$435 million in 2021, while gross profit for the June quarter was J$400 million compared to J$244 million for the comparable period in 2021. These positive financial returns have resulted in the company’s profitability improving with net profits surging by 160 per cent to J$298 million.

This J$183 million improvement in net profits surpasses the J$115 million net profit recorded in 2021. As a result, the earnings per stock unit climbed to $0.60, compared to $0.23 in 2021, representing an increase of 161 per cent.

Revenues climbed 65% to J$1.79 billion

Revenues for the period under review surged 65 per cent to J$1.79 billion, up from the J$1.09 billion recorded in 2021, representing an increase of J$706 million. Administration expenses amounted to J$405 million, reflecting an increase of J$109 million on the prior reporting period amount of J$296 million.

Managing director, Cecil Foster reports that, “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 our new Fulfilment Centre at 76 Molynes Road; increased selling and marketing 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 expense.”

Finance cost for the year-to-date was J$90 million compared to J$64 million for the prior reporting period, an increase of J$26 million. This increase is being driven primarily by increases in financing.

Regarding inventories, Foster explains that, “FosRich continues to proactively manage inventory balances and the supply chain with a view to ensuring that inventory balances being carried are optimized, 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 both at the individual product level and by product categories. Inventories have remained stable over both periods.”

More challenges with shipping

Shipping delays continue to be an important factor in calculating optimum inventory values. As it regards receivables, FosRich continues to actively manage trade receivables with an emphasis being placed on balances over 180 days.

The company has implemented strategies to collect these funds as well as to ensure that the other buckets are managed. Some 64 per cent of receivables are within the current to 60-day category, down from 68 per cent. Receivables also include advance payments made to foreign suppliers for the increasing levels of inventories required to support increased sales.

Shareholders’ equity now stands at J$1.81 billion, up from $1.01 billion in December 2021. The increase of J$801 million arose primarily as a result of property revaluation gains of J$495 million and retained profits for the year-to-date amounting to J$298 million.

Total shareholder count has increased to 2,976, up by 1,223 from the 1,753 at December 2021. During the June quarter, FosRich opened its new 100 per cent subsidiary, O’N’S’ Mini Mart & Electrical Supplies, which was incorporated on April 12, 2022.