LUMBER reports 42% increase in nine months net profit

March 15, 2022

The Lumber Depot Limited (LUMBER), for the nine months ended January 31, 2022, reported revenue of $1.16 billion, an increase of 10% year over year (2021:$1.05 billion). Revenue for the quarter totalled $400.19 million (2021: $353.10 million). Management noted, “Our market position is bolstered by our reputation for excellent service and for delivering good customer value. The financial performance during the quarter and the year‐to-date benefited from management initiatives to lead the market in securing adequate stock levels for all key hardware items while limiting price increases wherever practical. We also worked hard to maintain commercially reasonable opening hours and staffing levels throughout the most challenging periods of COVID 19.”

Cost of sales for the period amounted to $902.74 million (2021: 833.39 million). Consequently, gross profit for the period closed at $257.40 million (2021: $219.26 million).

Moreover, the Company reported administrative and other expenses of $119.63 million, 1% over the prior year. Impairment gains on trade receivables amounted to $393,447 (2021: $1.28 million). Lumber reported a gain from impairment losses on investments reversed of $119,520 (2021: nil) for the nine months ended January 31, 2022.

As such, operating profit amounted to $138.28 million, up 36% relative to the $101.53 million reported in 2021. For the quarter, operating profit totalled $37.05 million compared to operating profit of $35.05 million in 2021.

Other income for the nine months ended January 31, 2022 amounted to $9.23 million (2021: $731,347).

Net finance costs totalled $4.57 million for the nine months ended January 31, 2022 (2021: $1.39 million). Of this, finance income for the nine months amounted to $2.25 million (2021: $5.13 million). However, finance costs closed at $6.83 million (2021: $6.51 million).

Profit before taxation closed at $142.94 million, up 42% year over year from the $100.87 million booked in 2021. There was no taxation for the period resulting in net profit of $142.94 million (2021: $100.87 million) for the nine months ended January 31, 2022. For the third quarter, net profit was $35.72 million relative to a net profit of $34.28 million booked the corresponding quarter last year.

Management noted that “In the months ahead, we expect that Jamaica will be impacted by inflation, policy measures that are designed to control inflation, increased energy costs, supply chain challenges and exchange rate volatility. Fortunately, Lumber Depot has established a strong market position in the communities we directly serve. The company benefits from its strategic location in Papine, which allows it to effectively provide hardware products to areas of the city now experiencing significant high‐quality commercial, light‐industrial, and residential real estate development.”

Earnings per share (EPS) for the nine months amounted to $0.20 (2021: $0.14). For the quarter, EPS amounted to $0.05 (2021: $0.05). The trailing twelve months earnings per share amounted to $0.26. The number of shares used in our calculations is 706,237,500 units. Notably, LUMBER’s stock price closed the trading period on March 14, 2022 at a price of $3.96 with a corresponding P/E ratio of 14.95 times.

Balance Sheet at a glance:

As at January 31, 2022, the Company reported total assets of $588.39 million (2021: $500.58 million). The main contributors were ‘Property, Plant and Equipment’ and ‘Inventories’ which closed at $131.80 million (2021: $18.27 million) and $158.49 million (2021: $133.57 million), respectively.

Shareholders’ Equity as at January 31, 2022 was $437.79 million (2021: $278.99 million). This resulted in a book value per share of $0.62 relative to the $0.40 reported in the corresponding period last year.



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