FOSRICH Group of Companies is charging forward with its expansion and solar financing plans.

The company recently opened an office in Tennessee, in the United States, as a gateway into the market in that country.

“We have been going through this for the last two years. And we are now working. It’s an office, not a store. We are working with small and medium-sized businesses to supply,” Cecil Foster, managing director of FosRich, told shareholders at the company’s annual general meeting on Tuesday.

FosRich is eyeing a slice of the trillion dollars the US Government said it intends to spend on airports, bridges, roads, and water systems. The new location will have a lean staff of just two or three people, who will liaise with contractors and suppliers, including lumber and hardware providers, to facilitate a smooth supply chain. The company will work directly with small and medium-sized businesses, which are guaranteed at least 10 per cent of the project contracts.

“These businesses need support, and that’s exactly what the company plans to provide,” said Foster.

Foster also cited Tennessee’s welcoming residents and favourable tax climate as the driving forces behind his decision to establish a presence in the state.

As for its highly anticipated megastore in Kingston, located next to the main store, Foster provided an update, stating that completion is imminent. While the building may appear finished from the outside, Foster emphasised that there are still internal details to be finalised. He estimated that it will take an additional three to four months to complete the project, but assured that the wait will be worth it.

The newly acquired store has the potential to surpass $2 billion in sales, a target FosRich aims to achieve. The company will supply a full range of hardware products to the market this year.

In May, the company opened a store in Drax Hall, St Ann and another in Montego Bay, St James.

In addition to physical expansion plans, the company has launched programmes to make renewable energy more accessible to the masses. One such initiative aims to make solar systems and water heaters more affordable for individuals and businesses.

“So we are working, and we have been working and trying to find ways to make it easy for people to acquire solar, whether they want a heater or solar systems for powering their businesses and their homes,” Foster announced.

The company has collaborated with various institutions and developed financing plans that allow customers to pay for their solar water heaters in six months and solar systems in up to three years. FosRich launched its solar system financing option in January. Foster said the responses so far have been overwhelming.

Under the initiative, the company provides financing for private schools, churches, individuals, and small manufacturing companies that would otherwise struggle to pay upfront costs. In an interview with the Jamaica Observer, Foster revealed the financing is provided at an interest rate only slightly higher than the market rate — “a mere one to two per cent above”.

“When we look at it, we have over three billion dollars’ worth of requests. In 2022, we had, in our books for the year, close to $2 billion. [In] 2023, we started the year at zero again, and it brings up to another three-point something billion dollars,” Foster explained to Caribbean Business Report.

Foster also shared the company’s priorities for the year, saying there will be a renewed focus on its transformer repair business. The company has established a reliable channel for raw material supplies, paving the way for the manufacturing of transformer coils, a critical component made from high-quality copper or aluminum. This segment is expected to be a key driver of growth for the company in 2024, with plans to expand and build on its momentum.

In highlighting the company’s financial position, Chief Financial Officer Peter Knibb shared that the company’s hardware line has seen a significant gross profit margin of 45 per cent in 2023. Comparing growth areas in 2018 to 2023, PVC sales have quadrupled from five per cent to 20 per cent of total revenues, control devices have increased from five per cent to nine per cent, and solar products have doubled from four per cent to now contributing eight per cent of the company’s revenues.

With channel expansions planned for 2024, including Bayside, Drax Hall, and the Superstore, the company expects accelerated revenue growth. Given the pattern of increases, Knibb anticipates significant revenue growth in the future. Despite increases in revenues and gross profit, the company’s net profit has declined for the first time in years. The main culprits are a doubling of finance costs due to a refinanced bond with a higher interest rate and increased insurance expenses. Additionally, the company has invested in infrastructure to support future growth in areas like industrial and health care, which has led to higher staff costs.

“We’re confident that the seeds that we’re sowing now will provide a good harvest in the years to come,” said Knibb.