Following the recent $315-million investment in Atlantic Hardware and Plumbing Company Limited (AHPC), Lumber Depot Limited (LDL) has entered into an agreement to purchase a property to support its growing operations.

The full-service hardware store made the disclosure in its April 2025 audited financial statements which were released on Tuesday. LDL entered an agreement on May 8 to purchase land and building valued at $205 million. The acquisition will be financed by debt to support its operational activities.

When the Jamaica Observer reached out to Managing Director Major (Ret’d) Noel E Dawes, he indicated that the transaction is still being negotiated and that an update would be provided once negotiations have concluded.

However, he noted, “Subject to a successful acquisition of the property, there will be a number of legal and regulatory approvals which will be required for completion prior to any adjustments or improvements. When these have been identified, negotiated and approved, we will be better able to identify our strategies in keeping, of course with market demand.”

Lumber Depot has been operating a hardware store for over 20 years from its Papine location at 17c Gordon Town Road. However, the current company was formed in July 2019 when it was spun off from Blue Power Group Limited’s lumber division. Lumber subsequently listed on the JSE Junior Market in December 2019 when it raised $169.50 million.

Lumber Depot purchased its Papine property and building from Blue Power in December 2021 for $165.30 million. Blue Power Group and Stony Hill Capital Limited are the largest shareholders in Lumber Depot with equivalent 16.4518 per cent stakes. Stony Hill Capital is connected to Musson Group’s Paul B Scott and Melanie Subratie who are also Lumber Depot directors.

Lumber Depot’s revenue for the 2025 financial year was marginally down from $1.52 billion to $1.51 billion due to different market events during the period. Chairman Jeffrey Hall referred to it as the prevailing economic circumstances in Jamaica in his brief to shareholders, but Managing Director Dawes pointed to other factors.

The passage of Hurricane Beryl in July 2024 and ongoing expansion of Caribbean Cement Company Limited’s production capacity during the period resulted in a cement shortage as supply was constrained in the period. As a result, the volume of cement sold was flat or marginally moved during the period.

There was also the reduction in the pricing of some inventory items by up to ten per cent in some instances. Lumber Depot also benefited from an increase in the volume of steel sold during the year.

Despite the relative softening in the market, 2025 represented the fourth consecutive year that the company’s revenue exceeded $1.5 billion. The company’s gross profit improved six per cent to $330.59 million with a gross profit margin of 21.89 per cent.

However, the company’s 12 per cent rise in operating expenses to $200.93 million due to higher staff costs resulted in the operating profit declining five per cent to $129.77 million. The reduction in finance costs and increase in finance income resulted in Lumber’s profit before tax decreasing two per cent from $142.88 million to $139.54 million. Since the company’s five year 100 per cent tax free remission ended in December 2024, the company incurred a tax charge of $3.66 million. Thus, net profit declined five per cent to $135.88 million with an earnings per share of $0.19.

Lumber Depot’s asset base grew 18 per cent to $943.93 million with its investment in Atlantic Hardware valued at $377.38 million while its current assets stood at $392.83 million, with $193.63 million in cash and cash equivalents. The company’s accounts payable (only liability) decreased six per cent to $115.88 million with shareholder’s equity rising 22 per cent to $828.05 million.

Lumber Depot initially acquired a 35 per cent stake in Atlantic Hardware for $280 million in May 2024 and accounted for it as an investment in associate under the equity method. Lumber subsequently invested $35 million during Atlantic’s March 2025 initial public offering on the Junior Market. The issuance of new shares resulted in Lumber’s interest being reduced to 29.29 per cent.

Due to Construct Group Limited, a company connected to PB Scott and Deanall Barnes, and General Accident Insurance Company Jamaica Limited, a company connected to PB Scott and Subratie, owning 51.74 per cent of Atlantic Hardware and appointment to six of the nine board seats, it was determined that Lumber held no significant influence over Atlantic’s financial and operational decisions. Lumber Depot can appoint three non-executive directors to Atlantic’s board with chairman Jeffrey Hall and Major Dawes currently on Atlantic’s board. PB Scott chairs Atlantic’s board.

As a result of these assessments, Lumber Depot will now account for Atlantic as an equity investment measured at fair value through other comprehensive income. Lumber Depot recorded a $62.38 million change in fair value for the period on its Atlantic investment.

Lumber Depot closed at $2.58 on Thursday which left it down five per cent in 2025 with a market capitalisation of $1.82 billion. QWI Investments Limited exited the top ten listing during the 2025 period.

“However, we are extremely optimistic and anticipate further growth in our business based on current increasing demand from our loyal and new customers. There have always been opportunities arising of which historically, Lumber Depot has made excellent use, from our early beginnings on Victoria Avenue, downtown Kingston, to our humble beginnings here on Gordon Town Road. So, we look forward to a good financial year,” Dawes closed.