Higher staff cost dims FosRich Q3 profits
Increased emoluments and the additional hire of skilled talent were among the chief reasons behind a lacklustre profit performance for lighting, electrical and solar energy products distributor FosRich Limited at the end of its September quarter.
According to the company’s latest financial filings, its year-to-date or nine-month profit which amounted to $135.5 million was some 65 per cent below the $388 million earned during the corresponding period last year, even after securing higher revenues of $2.8 billion.
For the July to September period alone, the company returned a loss of $27 million when compared to approximately $90 million in profit earned in the similar September 2022 quarter. The company’s gross profit during the quarter also fell to $264 million, down from $330 million in the prior year period.
“Our staff cost went up a lot as seen by the numbers, this mainly as we look to employ another 50 persons for which we are also now making the necessary provisions so that we can have them in place for the opening of the super store by the end of our first quarter next year,” Managing Director Cecil Foster told the Jamaica Observer during an interview this week.
Currently in search of more technical persons to fill existing skill gaps, Foster said the company is seeking to attract and retain a more talented team, “one armed with the requisite skill sets, specialised training and product knowledge,” which he believes will be needed to operate the new super store timed for opening in 2024.
“We have to train these persons as they don’t come to us ready…a lot of our engineers are not commercially minded, so we have to train them especially as we look to double our staff complement with our move into the new superstore. We are, therefore, getting ready for that as we can’t wait to do so in the last month or days before moving in,” Foster said.
At the end of the nine months, FosRich’s administrative expenses went up some $169 million to total $781 million.
The changes its directors in the recent report to shareholders largely attributed to “increased staff-related costs for salary adjustments, increased sales commission due to improved sales performance and improvements in staff benefits; increased travelling and motor vehicle expenses; increased insurance costs due to increases in policy renewal rates and increased depreciation due to increases in the carrying values of property plant and equipment, increased professional fees, rent and security cost.”
The period marred by additional expenses also incurred increased finance costs as a result of higher bond renewal rates and bank financing charges, all of which further weighed on the company’s bottom line.
An optimistic Foster, looking forward to much better out-turns at the end of the current quarter and year, said that even as the business undertakes increase expenditure, the move falls in line with plans to capitalise on growth.
“We are now in a stronger building out period which will also see the announcement of these developments later, but as it is now — we have to spend some money in order to ensure that we dominate the market in the next year or so,” Foster also said to the Business Observer, hinting at an upcoming venture in Montego Bay on which the business is looking to close by year end and to have up and running by January.
“For the rest of the year, I think our numbers should be better than that of the third quarter. We have some strong revenue projects on which we are now working that will be coming on stream, and based on our pipeline we expect these numbers to be significantly above where they are now. We also don’t have much other expenditure left to undertake in the last quarter of this year so we are expecting much better results then. With our upcoming revenue project we expect to have a good start to the first quarter which we expect to be carried over to the rest of 2024,” he stated.