Business
JM | Nov 23, 2022

Slow second quarter for Medical Disposables and Supplies

/ Our Today

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Sustained supply chain issues have led to out-of-stock positions

(Photo: Facebook @MedicalDisposablesSupplies)

Durrant Pate/Contributor

Medical and consumer durables supplier, Medical Disposables and Supplies (MDS) recorded a slow second quarter in which the company returned marginally lower revenues compared to the corresponding period in 2021.

For the September quarter MDS closed with revenues of J$930.24, down J$6.24 million or one per cent from the J$936.48 posted for the corresponding quarter in 2021. The marginal reduction in revenue signalled relative stability for the second quarter, proving resilience in a market that is rebounding from the effects of the pandemic.

For the half-year period, sales at MDS grew by $203.6 million or 12.6 per cent when compared to the same period in 2021. The management is reporting that “business activity has seen tremendous improvement which is reflective of the overall increase in sales in the Pharmaceutical and Consumer Divisions”.

As a result, gross profit closed at J$250.93 million for the current quarter improving by seven per cent or J$16.92 million compared to the second quarter of 2021, resulting from an increase in sales of pharmaceutical and consumer items. Gross profit percentage increased from 24.99 per cent in 2021 to 26.97 per cent in 2022.

INTEGRATION OF NEW SUBSIDIARY

Chief Executive Officer Kurt Boothe gave an update on the integration of its newly formed subsidiary, Cornwall Enterprises, into the MDS business operations. MDS is midway in with additional benefits in sales and internal operations having been realised.

On completion of this exercise, it is expected that further synergies will be achieved. The key objective is the alignment of long-term business strategies to focus on deeper market penetration and strengthening valued relationships.

Kurt Boothe, CEO of Medical Disposables & Supplies. (Photo: Facebook @Medical Disposables & Supplies)

In the meantime, there was a sharp rise in operational expenses. Total operational expenses for the second quarter have grown 10.2 per cent or J$18.67 million, due generally to increased selling and promotional activity to boost sales, which is reflected in the increased cost.

Total non-operational expenses for the period were down marginally to J$25.2 million from the 2021 booking of J$25.4 million. Total assets grew by J$294.45 million or 11.2 per cent, increasing from J$2.62 billion at the end of September 2021 to J$2.91 billion at the end of September 2022.

HIGHER INVENTORY DRIVING RISE IN ASSETS

This increase was due to higher levels of Inventory on hand of 42.9 per cent or J$404.62 million when compared to the previous year. As the Group implements a new strategic approach to purchasing and logistics, it has become necessary to increase the inventory levels on hand.

Boothe explains that, “this response will also minimise the risks associated with uncertainties caused by disruptions in the global shipping and logistics sector.” Accounts receivable has decreased by J$138.08 million as at September 30, 2022 when compared to the same period in 2021.

WORKING CAPITAL CREDIT LINES

Total Liabilities increased by J$200.1 million or 12.7 per cent from J$1.57 billion at the end of the second quarter of the prior year to J$1.77 billion for the same period in 2022. Working capital credit lines grew by J$257.1 million, which reflected the sustained increase in inventory levels.

Trade payables reflected a reduction of J$95.3 million when compared to the corresponding year. Shareholders’ equity increased by J$94.35 million or nine per cent from J$1.04 billion as at September 30, 2021 to J$1.14 billion at the end of the current period.

Non-controlling interest accounted for J$136.87 million, while earnings per share fell from J$0.18 a year ago to J$0.14 per share at the end of the second quarter.

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