H&L profit up 310%

Profit after tax at Hardware & Lumber (H&L) was $40 million for the three months ending March this year, a 310 percent increase over the $10 million for the same period in 2013 resulting in earnings per share of 50 cents, compared to 12 cents for the comparative period in 2013. Return on equity based on the first quarter results is 13.6 percent, based on IC Insider’s projection of $434 million or $5.40 per share for profit after tax for 2014, the return on equity should hit a strong 31 percent.
Revenue| Sales for the 2014 quarter was $1.81 billion, 17 percent more than the $1.55 billion achieved in 2013. According to management in their report to Jamaica Stock Exchange” revenue in the ‘Household, Hardware and Building Products’ segment increased by 16.7 percent while the ‘Agricultural Products and Equipment’ segment recorded growth of 17.7 percent. All of our merchandise categories did well, led by the building supplies division which delivered significant revenue growth, albeit at lower margins. The overall improved performance was realized in both the wholesale and retail divisions of the business through the expansion of product assortment, improvements in availability and by working closer with our customers to better understand and supply their needs”.
Gross profit| H&L achieved $411.5 million in gross profit or a meagre one percent gain over the corresponding period in the prior year. “The average margins declined by 3.6 percent, due primarily to the sales mix and higher product costs. Total operating expenses were $376 million or 4.6 percent lower than the comparative period in the prior year. The company realized savings in pension and other retirement benefits costs from the changes to the benefits programmes implemented at the end of 2013. In addition, several categories of expenses including staff costs, utilities and repairs and maintenance expenses were reduced through ongoing process improvement and cost containment”
“Net current assets increased by 12.4 percent to $1.05 billion, caused mainly by increased inventory and accounts receivable balances. The value of inventory increased to $1,448.4 million, partly due to the higher cost of the United States dollar as well as a desire to maintain adequate inventory levels to ensure consistent product availability for our customers” management indicated.
At the end of March, cash was $313 million representing a decline of $45 million when compared to the balance at March, 2013, equity stood at $1.2 billion.