May 2013 Financial News

H&L makes $9.9m profit in first quarter

May 17, 2013

Hardware and Lumber (H&L) made net profit of $9.9 million for the first quarter ended March 31, rebounding from a loss of $5.2 million reported for the corresponding quarter in financial year 2012.

The company has, over the last few years, made considerable improvement using various strategies to turn its performance around after mounting losses.

"The improved performance was delivered through increased sales, greater focus on margin manage-ment and the integration of the wholesale segment into the Rapid TrueValue operations," said Chief Executive Officer Andrea Coy in a report to shareholders.

"Effective January 1, 2013, the company reorganised its operations into two operating divisions, down from the previous three, which saw the wholesale segment subsumed into the retail segment," the report said.

The net profit was achieved on increase of 2.4 per cent in revenues to $1.54 billion compared to $1.51 billion reported in the same quarter last year.

H&L said the Rapid TrueValue segment, which retails household, hardware and building products, contributed most to the increase in total revenue, with a growth of 3.7 per cent resulting from increased focus on core business and satisfying customers' needs through better stock management.

Sales in its other business line, AgroGrace, which deals in agricul-tural products and equipment, declined by 1.1 per cent stemming from less-than-favourable field conditions in some sections of the island, which negatively affected the sales of various agricultural inputs.

Operating expenses increased by 8.5 per cent to $394.3 million due to charges associated with the company's pension scheme and other retirement benefits, of which operational cost-saving initiatives and ongoing control of discretionary spending were not enough to offset.

The company said it also continued prudent management of its working capital, which saw the amount owed to trade and other creditors declining by 3.1 per cent to $913.2 million at the end of March 2013.

At the end of March 2013, inventory balances stood at $1.15 billion, or 13.9 per cent lower than the balance at March 31, 2012. Improved credit management resulted in a 4.9 per cent reduction in trade and other receivables to $459.9 million.

The company said that while the trading environment remained competitive it would continue to focus on achieving operational efficiencies in addition to strengthening its partnership with suppliers, customers and other stakeholders.

The ongoing refurbishing of its Rapid TrueValue stores continues with the latest branch reopened in Mandeville, Manchester, in April, bringing to three the number of stores which have been refurbished over the last two years.

The other two are Rapid TrueValue at Lane Plaza, Constant Spring, St Andrew and Rapid True Value in Montego Bay, St James.

In the months ahead, H&L said it will continue to make further capital investments in three additional stores in the network, as well as in the training of employees as they strive to deliver on commitment to improve the shopping experience for customers.

"We will also continue the ongoing review of our risk management systems, internal processes and operational controls in order to improve the efficiency and effectiveness of the organisation," said H&L.

H&L is majority owned by conglomerate GraceKennedy Limited. It retails and wholesale building material, home-improvement supplies, household items and agricultural products, as well as offer residential and commercial construction services.

H&L is listed on the Jamaica Stock Exchange and last traded at $3.95. Its ordinary shares have a market value of $319 million.


Source:
sabrina.gordon@gleanerjm.com
Jamaica Gleaner
Friday May 17, 2013

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