Feb 2011 Financial News

Hardware & Lumber posts $33-million net profit

Feb 21, 2011

Grace Kennedy subsidiary Hardware and Lumber (H&L) has reported that the company recorded revenues of $1.5 billion and a net profit of $33 million for the third-quarter ended December 31, 2010.

The bottomline represents a turnaround from the $43-million net loss H&L posted for the comparative period in 2009.

H&L CEO Simon Roberts said last week that for the 12 months ended December 31, 2010, revenues and net profit were $5.7 billion and $19 million respectively compared to revenues of $5.9 billion and a net loss of $226 million for the same period in 2009. Despite a 0.5 per cent decline in revenues for the quarter (3.6 per cent for the 12 months), the company increased gross profit above prior year levels for both the quarter and the 12 months through improved margin management, reduced shrinkage, and increased product variety and availability.

Combined with an increase in other operating income and a reduction in operating costs, the company recorded operating profits of $60 million and $92 million for the quarter and 12 months respectively, compared to profit of $3 million and loss of $29 million for the same periods last year.

Roberts attributed the improved profit outturn to reduced finance costs from both lower debt levels and recorded foreign exchange gains on US dollar denominated debt, among other factors.

Revenues in the retail segment increased by 5.9 per cent in the quarter compared to 2009, due, he said, to improvements in product mix, availability and customer service. Revenues in the wholesale segment improved from the previous quarter, although remaining behind 2009 levels. The segment is continuing to be impacted by the slowdown in the construction sector.

The agricultural segment recorded a 5.4 per cent increase in revenues in the quarter as compared to 2009, in keeping with the overall growth trend in the agricultural sector.

"The segment is performing well, and product demand remains strong as our farmers work towards recovering from the poor weather conditions in September and October and severe drought conditions in the first six months of the year," Roberts commented.

"We continue to improve product variety and availability, and remain focused on improving our working capital position through the aggressive collection of receivables and retirement of expensive debt."

The CEO also reported that, during the quarter, H&L's refurbished Rapid True Value store at Lane Plaza, Kingston continued to experience a significant improvement in performance, and very positive feedback from customers.

"Across our network, customer service, product knowledge and health and safety training continues for our team members. On December 1, the operations of our distribution centre were successfully transferred to a third party. It is expected that this change will improve our delivery capabilities and reduce costs," Roberts said.

GraceKennedy Group chief operating officer, Don Wehby expressed satisfaction at the performance of the company.

"The entire team has worked tirelessly to achieve these results and they must be congratulated for their efforts," he stated.


Source:
Jamaica Observer
Sunday February 20, 2011

http://www.jamaicaobserver.com/business/Hardware---Lumber-posts--33-million-net-profit#ixzz1EcA1unS2