LUMBER reports 33% decline in three months net profit

September 14, 2022

The Lumber Depot Limited (LUMBER), for the first quarter ended July 31, 2022, reported revenue of $399.88 million, a 5% decline year over year (2021: $420.08 million).

Cost of sales for the period amounted to $318.15 million (2021: $316.61 million). Consequently, gross profit for the period closed at $81.73 million (2021: $103.47 million).

Moreover, the Company reported an impairment gain on trade receivables of $6.05 million relative to the gain of $6.44 million a year prior.

Administrative and other expenses closed the period at $39.67 million, 8% higher than the $36.75 million in the three months ended July 2021.

As a result, operating profit amounted to $48.13 million, down 34% relative to the $73.22 million reported in 2021.

Other income amounted to $1.38 million (2021: $642,855) and finance income totalled $858,637 (2021: $549,013) for the three months ended July 31, 2022. Additionally, finance cost for the first quarter amounted to $2.04 million, 22% less than the $2.63 million reported twelve months earlier. As a result, net financial cost closed at $1.18 million  (2021: $2.08 million).

Profit before taxation amounted to $48.33 million, down 33% year over year from the $71.78 million booked in 2021. There was no taxation for the period resulting in net profit of $48.33 million at the end of the first quarter; this represented a 33% contraction relative to the $71.78 million booked in 2021.

Earnings per share (EPS) for the first quarter amounted to $0.07 (2021: $0.10). The twelve months trailing EPS amounted to $0.23. The number of shares used in our calculations is 706,237,500 units. Notably, LUMBER’s stock price closed the trading period on September 13, 2022 at a price of $2.88 with a corresponding P/E of 12.68 times.

Management noted that, “During the First Quarter, our customer base reacted to uncertain economic conditions, including high interest rates and a spike in commodity prices for certain key hardware items. This led to some softening in sales and some compression in gross margins (20% in the First Quarter, relative to 24% in the first quarter of the prior year).”


Balance Sheet at a glance:

As at July 31, 2022, the Company reported total assets of $649.42 million, an increase of 14% from the $569.13 million as at July 31, 2021. This mainly constituted to ‘Property, Plant and Equipment’ which closed at $178.20 million relative to the $20.27 million booked in 2021.

Shareholders’ Equity as at July 31, 2022, was $527.08 million relative to $394.89 million booked a year prior. This resulted in a book value per share of $0.746 (2021: $0.559).


Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.

Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.