Hardware & Lumber, a Grace Kennedy subsidiary, which recorded moderate increase in sales for the March quarter of this year, accelerated sales a bit in the June quarter at 8.9 percent pace over the second quarter of 2012 compared to a mere 2.4 percent increase in the first. Revenue out turn was $1.744 billion in the latest quarter up from $1.548 billion in the first quarter as well as an increase on the $1.6 billion generated in the second quarter of 2012. Year to June revenues increased to $3.29 billion over the $3.1 billion in 2012.
The second quarter revenues contributed to a big jump in profits for the quarter and the six months as profits jumped to $43.3 million from a revised loss of $1.44 million in 2012. For the six months profits amounted to $52.17 million up from a loss of $6.26 million.
Gross profit margin increased to 26.22 percent in the latest quarter, roughly the same for the six months period, compared to 25.5 percent in 2012. Operating expenses were kept to just $398 million in the June quarter just a few million up from the $391 million spent in 2012, but the six months figure grew quite a bit to $791 million versus $755 million.
“Operating efficiencies were achieved through the rationalization of the staffing model as well as in other areas such as security and utilities. However, there was a significant increase in the costs associated with the company’s pension scheme and other retirement benefits, in keeping with the revision of the accounting rules governing such benefits which became effective January 1, 2013. For the first six-months, these charges increased by $40.7 million compared to the same period last year,” Management stated.
Interest cost also declined for the six months as the company paid down loans which stands at $458 million versus $650 million at June 2012. At the same time cash grew to $376 million compared to $196 million in 2012, but payables climbed to $1.1 billion up from $992 in June 2012 and $694 million at the end of December last year.
While there is a clear sign of a turn-around in the operations, the segment results for agricultural products and equipment reflect a loss of $55 million in the half year results compared to a profit of $129 million. The 2013 figure is only a slight improvement over the loss of $66 million in 2012. There is much room for improvement in the hardware division that could swell the bottom-line if that segment is turned around.
Outlook | Earnings should pick up as the year progresses and IC Insider expects to see earnings for the full year around $2 per share, making the stock very cheap.
Insider call | Hardware & Lumber is an IC Insider Buy Rated stock.
[…] result for 2013 represents a major turnaround in the fortune of the company that has been struggling with major losses in 2008 and 2009, high […]