Hardware company Lumber Depot said it is on the lookout for new acquisitions as it positions itself to grow and increase shareholder value.

Speaking at the company’s annual general meeting last Friday, Managing Director Major Noel Dawes, though tight-lipped on details, said that at least one entity is now being seriously eyed.

“We are actively in negotiations right now, looking for entities along the same line of business and though we know discussions can go either way, we are looking to close on one in the short term but I can’t say much more about than that right now,” he told the Jamaica Observer.

Asked about the intended capital spend earmarked for these ventures, Dawes also told the Business Observer that there will be no limit to funding once an acquisition is worth the investment, noting, however, that the company is willing to look further for additional financing where needed.

“We are looking for the right opportunity that will set us on a path for sustained growth, not just a quick fix that will bring us something and by six months we’re in deep trouble,” he said to shareholders.

Lumber Depot, which has its core business in the sale and distribution of a wide range of more than 3,000 hardware and building/construction supplies, has been in existence for the last 25 years operating from its flagship retail store in Papine, St Andrew. Following its split from the Blue Power Group in 2019, the company has been working to carve out its presence and push its own weight in the local market.

At the end of its last financial year ended April 30, 2023, the Junior Market listed company delivered revenue of $1.5 billion and profit of $145 million. Both revenue and profit, which fell by 3 per cent and 21 per cent, respectively, the directors said were adversely impacted by continued downturns in the once booming construction industry, which contracted by less than a per cent (0.7 per cent) during the April-June quarter, according to final outturns reported by the Statistical Institute of Jamaica (Statin).

Despite the reduced margins, the company’s directors have, however, said that the business remains strong and highly competitive securing returns on sales of 9 per cent and on equity of almost 25 per cent and on total assets of 21.3 per cent. This, as it trims expenditure down 7 per cent year on year.

“Our annualised return on equity continues to be strong and exceeds 20 per cent. Importantly, the business is highly cash generative, earning cash from operations of over $139.3 million and now retaining cash and investments in excess of $300 million,” Chairman Jeffery Hall said.

Dawes, in further highlighting some other strategic steps being taken by the company, pointed to a number of focus areas on which it will double down this financial year. Currently moving to centralise operations and bring its accounting department in house, the managing director said this will lead to improved efficiencies supported by investments in new systems to track inventory as management broaden its knowledge around new trends and demands in the hardware market.

“Over the last half of the financial year, we have embarked on new ways of doing business, looking at greater levels of importation and as a result has been able to apply for and receive our own import licence under the Lumber Depot name and brand. This puts us in a position where were are now able to import a wider array of products which will bring us even more benefits as we expand,” Dawes said.

“As we grow, we also want to build out our digital footprint to increase market penetration. We have a large customer base right now, one very diverse in terms of the communities we serve, so we believe we can better serve them through the use of social media. We have seen a hundred per cent increase in our business WhatsApp and we want to further increase as we also strengthen our website capabilities to bring more online user-friendly options for customers,” Dawes stated.

“The market here has so much opportunities for growth and development and there are several different things that we want to go after, but right now we are going through the stages in a systematic way to ensure that we can properly take on new ventures to successfully integrate them into our business,” he added.