Net profits of J$106.7 million on revenues of J$1.15 billion for combined three quarters

Durrant Pate/Contributor

Lumber Depot is experiencing a softening of sales, particularly over the third quarter ended January 31, 2023, as result of the prevailing economic circumstances.

Sales are down one per cent relative to the prior year and compression in gross margin. As a result of these factors, net profit is down relative to the $142.9 million recorded for 2021. Operations for the nine‐month period ended January 31, 2023 saw Lumber Depot generating year‐to-date net profits of J$106.7 million on revenues of $1.15 billion.

The annualized return on equity continues to be strong and exceeds 18 per cent. 

Importantly, the business is highly cash generative and earned cash from operations of over J$110 million and now retains cash and investments of in excess of J$275 million.

Reacting to uncertain economic conditions

Over the course of the financial year, Lumber Depot’s customer base reacted to uncertain economic conditions, including high interest rates, challenges with the availability of certain key hardware items and, at the beginning of the year, a spike in commodity prices. 

Lumber Depot’s managements says these conditions are now evident in the slowdown of the construction sector generally across Jamaica.

Lumber Depot operates a full service hardware store in Papine that serves the needs of large and smallscale building contractors, as well as homeowners doing construction projects, renovations and repairs.

In his forward to shareholders on the financial performance, company chairman, Jeffrey Hall states: “We are pleased that despite the current challenges, Lumber Depot has continued to trade positively and to deliver strong results and, importantly, to maintain excellent service levels and customer endorsements. Our strategy is to consistently offer competitive prices on our products and to maintain our service standards and inventory availability.”

Hall noted that Lumber Depot has been generally successful with this and, in turn, this has improved its standing with key customers.

The company considers its Papine location to be an important part of its success.

The facility in Papine is now owned by the company.  

The Lumber Depot business has been in operation for more than 20 years and, during this time, has established a market leading position in the communities it directly serves and a strong reputation for excellent service and good value across the wider Corporate Area.

The immediate plan is to further develop the facility in Papine through continuous investments in the physical space, operating systems, plant and equipment and our service team. 

Over the year ahead, Lumber Depot said it will continue to judiciously manage its cash and inventory levels with a view to paying dividends and improving shareholder returns.

The board and management said it was completely committed to placing the business in a strong financial and management position to boldly seize and execute on the expansion opportunities that we expect to arise in Jamaica as soon as economic normalcy returns.