Durrant Pate/ Contributor

Energy and lighting company, FosRich is reporting a less than par year-to-date performance in which both revenues and profit contracted.

The combined nine-month returns ended September 30, 2024, saw revenues contracted to $2.81 billion coming from $2.86 billion in the corresponding period in 2023 while operating profit went down to $94 million, compared to $154 million in the prior period.

As a result, the earnings per stock unit amounted to $0.016 down from $0.027 a year ago. Despite the increases realized from sales of control devices, hardware items, industrial items and solar products, there was an overall reduction in sales. 

This was attributed primarily to the mix of products sold in the period. During the third quarter, FosRich generated income of $1.07 billion compared to $839 million in 2023. Gross profit for the quarter amounted to $447 million compared to $264 million last year. 

Reasons for fall off in revenues and profit

The year-to-date numbers are affected by the substantial fall in PVC and solar panel costs on the world markets, in addition to the slowness in housing starts locally, caused primarily by the considerable increase in local interest rates in the current period compared to the prior year. 

Also, FosRich is yet to begin to benefit from the recent reductions in interest rates. Administration expenses for the year-to-date closed on $1 billion, reflecting a 27% increase over last year. 

The costs were fuelled primarily by increases in staff-related costs for new staffing levels for the two new branches and other developmental activities, increased marketing costs, professional fees, travelling and motor vehicle expenses, electricity, depreciation/amortization, security, and insurance costs, due to increases both in policy renewal rates and exposure. 

Finance costs for the combined three quarters amounted to $100 million more than the corresponding period in 2023. This increase is tied to debt refinancing in a high-interest rate environment and additional loan financing. 

Inventories and receivables being managed

With its acquisition of Bayside Hardware in Montego Bay and the launch of our Drax Hall store during the year, FosRich is seeing an uplift in inventories amounting to $428 million, which impacted all of its lines of business. 

The company continues to proactively manage inventory balances and the supply chain, to ensure 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.

This is being done to avoid both overstocking and stock-outs as monitoring is taking place both at the individual product level and by product categories. Regarding receivables, FosRich continues to actively manage trade receivables with an emphasis being placed on balances in the over 180-day bucket. 

The company has implemented strategies to collect these funds, as well as to ensure that the other buckets are managed and has re-evaluated all its credit relationships. Where necessary, credit limits have been reduced and credit periods shortened. 

For some inventory items, the company has instituted seven-day credit or cash. Sixty-two per cent of receivables are within the current to 60-day category, equalling the 62% for December 2023. Receivables also include advance payments made to foreign suppliers for the increasing levels of inventories required to support our sales strategy.