FosRich Company Limited scaled back expansion in 2025 after a steep fall in sales pushed the electrical, solar and PVC products company to a $506-million loss, as the company shifted focus towards conserving cash and reducing debt.

The Junior Market-listed company reported revenues of $2.86 billion for the year ended December 2025, down 22 per cent from $3.68 billion in the previous year, according to audited financial statements released this week.

The loss marks a sharp reversal for FosRich, which spent recent years expanding its manufacturing, distribution and solar operations through debt-financed investments.

Gross profit fell even faster than revenues, plunging 47 per cent to $925 million as revenues dropped while cost of sales remained largely unchanged. The company swung from a $34.6 million profit in 2024 to a net loss of $506.2 million in 2025.

The downturn comes as higher borrowing costs and slower spending weigh on businesses linked to construction and retail activity.

The financial statements suggest FosRich is now moving away from expansion and towards conserving cash, reducing debt and tightening spending.

Capital spending fell to just $13.3 million in 2025, compared with roughly $741 million in the previous year, while FosRich reduced inventory by more than $750 million and repaid over $234 million in loans.

The company also did not pay a dividend during the year after distributing $76.2 million to shareholders in 2024.

The pullback follows years of rapid expansion that left the company carrying high debt at a time when sales slowed and financing costs remained elevated.

Despite the sharp loss, FosRich still generated positive operating cash flow of $436.7 million during the year, reversing negative operating cash flow recorded in 2024.

That improvement was driven largely by lower inventory levels and better collections from customers, suggesting the business is still generating cash from its operations even as profits come under pressure.

Still, debt remains one of the company’s biggest challenges.

Auditors Baker Tilly identified borrowings as a key audit matter, noting that total long-term and short-term debt stood at approximately $2.92 billion at year-end and that the group remained “highly leveraged”.

Finance costs climbed to $260.7 million during the year, continuing to weigh heavily on earnings.

While the results point to mounting pressure on the balance sheet, the auditors said they found no breaches of loan agreements or defaults after reviewing the company’s financing arrangements and repayment schedules.

Shareholders’ equity also fell sharply to $1.49 billion from nearly $2.0 billion a year earlier as retained earnings were cut by more than half.

The audited statements also highlighted sizeable balances owed to FosRich by related companies, which auditors flagged as a key audit matter.

Amounts due from LCCM Investment Ventures Limited and B C Dundee Enterprise Limited totalled about $1.5 billion at year-end, exceeding the company’s shareholders’ equity of $1.49 billion.

The balances are secured by personal guarantees from Cecil and Marion Foster, along with FosRich shares pledged as collateral. Auditors said assessing the value of the shares and whether they could be easily sold formed a key part of reviewing the balances.

FosRich remains tightly controlled by its founders. Shareholder information accompanying the financial statements showed Cecil Foster and connected parties controlled 39.9 per cent of the company, while Marion Foster held a further 39.6 per cent.