First quarter profits of J$48 million on revenues of J$400 million
Jamaican building supplier Lumber Depot has been experiencing softening in sales but remains profitable during the first quarter ended July 31, 2022.
For the period under review Lumber Depot generated profits profits of J$48 million on revenues of J$400 million. Company Chairman Jeffrey Hall reports that annualized return on equity continues to be strong and exceeded 35 per cent.
With the business being highly cash generative, it earned cash from operations of over J$70 million in the first quarter and despite its capital investment programme, it has no long-term debt.
During the quarter under review, Lumber Depot’s customer base reacted to uncertain economic conditions, including high interest rates and a spike in commodity prices for certain key hardware items.
FIRST QUARTER NET PROFIT DOWN J$23 MILLION
This led to some softening in sales (down 4% relative to the prior year) and some compression in gross margins (20% in in the first quarter, relative to 24% in the first quarter of the prior year).
As a result of these factors, first quarter net profit was down J$23 million relative to the prior year. Lumber Depot operates a full‐service hardware store in Papine that serves the needs of large and small‐ scale building contractors, as well as homeowners doing construction projects, renovations and repairs.
The Lumber Depot business has been in operation for over 20 years and during this time has established a market leading position in the communities we directly serve and a strong reputation for excellent service and good value across the wider Corporate Area.
Despite the challenges generally associated with the COVID-19 pandemic, higher interest rates, supply chain disruptions, high commodity prices and a spike in logistics costs, Lumber Depot has continued to trade positively and to deliver strong results.
The strategy is to consistently offer competitive prices on its products and to maintain service standards and inventory availability while prioritising the safety of customers and staff.
Lumber Depot management says it has been generally successful with this and in turn this has improved its standing with key customers.
Over the year ahead, the company plans to continue to judiciously manage its cash and inventory levels with a view to paying dividends and improving shareholder returns while allowing the business to seize opportunities for investment and growth that it expects to arise in Jamaica when economic normalcy returns.