A break in the usual pace of sales has, for the first quarter ended March 31, seen both profit and revenues for lighting, electrical, and solar energy products distributor FosRich Company Limited delivering lukewarm results.

For the reporting period, total income generated was $859.8 million—21 per cent below the $1.1 billion seen during the corresponding period of the prior year, the bulk of which continued to flow from the electrical, PVC, hardware, and transformer lines of business.

Net profit, on the other hand, which also plunged to $32.9 million, was approximately 73 per cent below the $121.7 million earned at the end of March 2023.

Unperturbed by the quarter’s performance, Managing Director Cecil Foster said he is confident that there will be a return to the usual earnings mark in subsequent quarters.

“The simple rationale behind our current numbers is just that sales did not hold up as much as it should in the quarter, this largely because we didn’t get to supply much of the items that we should have. We understand what is happening as is also normal with the cycle of any business, so there is no need to worry — the current quarter will be a lot different, as what we are supplying now will make up for what we lost out on during the first quarter,” he said in a telephone interview with the
Jamaica Observer yesterday.

Administrative expenses which also went up some 16 per cent during the reporting period totalled almost $302 million, driven primarily by increased staff-related costs for salary adjustments and improvements in staff benefits further compounded by increased marketing costs, travelling, and motor vehicle expenses and increased insurance costs. During the three-month period, some $8.3 million more was also expended for debt refinancing owing to the current high interest rate environment.

Foster, commenting on the rise in current expenses, said most of the associated costs were also in line with planned activities from which the company, in the next few quarters, will be looking to yield some positive returns.

“We are now putting in some new software as we also spend a little more to train and equip our staff to be better able to assist customers. With all systems blazing, we should begin to see a difference,” he told the Business Observer.

The company, as it continued to undertake a range of capital investment activities, has in recent months shored up its asset base following the completion of at least two new projects.

Following a recent billion-dollar deal, the lighting company and pipe manufacturer, in positioning itself as a hardware retailer, moved to acquire the business of Bayside Supersaver Hardware in Montego Bay, St James. Its Drax Hall location across from the Knutsford Express complex in St Ann is to also serve as a retail outlet from which it services customers in the garden parish and those adjoining, such as Trelawny and St Mary, as it builds out an islandwide network.

“We have leased Drax Hall, which opened on May 1, after which we have also acquired a hardware in Montego Bay which was opened on Monday [May 13], so we are now operating those two locations from which we supply all our products. Our Montego Bay location is particularly very strategic for us, as it allows us to supply other aspects of the construction industry as the hardware continues to sell lumber, cement, steel, and a range of other construction material and equipment,” Foster said.

Expecting to complete construction activities for its much-awaited FosRich Superstore and Corporate Offices at 76 Molynes Road, the managing director said plans are now advanced to have it ready in the current second-quarter period.

But that is not the only focus for the company. Foster said even though receivables are down, the company will be focusing on collecting the receivables that are outstanding. FosRich’s trade receivable balance as at March 2024 dipped to $451 million compared with $656 million as at March 2023.

Foster says special emphasis is being placed on balances in the over 180-day bucket.

“We have implemented strategies to collect these funds as well as to ensure that the other buckets are managed,” he said.

Foster adds that the company has re-evaluated all credit relationships, and where necessary, credit limits have been reduced and credit periods shortened.

“For some inventory items we have instituted seven-day credit or cash. Sixty-seven per cent of receivables are within the current to 60-day category, up from the 62 per cent for December 2023,” he said.