LUMBER reports 57% decrease in nine months net profit

July 15, 2020

**Prior year period, 2019, was calculated using Segment Report information from Blue Power Group Limited’s Financial Statements:

The Lumber Depot Limited (LUMBER), for the nine months ended April 30, 2020, reported revenue of $921.45 million, an increase of 3% year over year (2019: $898.34 million).

Cost of sales for the period amounted to $754.01 million. Consequently, gross profit for the period closed at $167.44 million.

Moreover, the Company reported administrative and other expenses of $108.29 million. Impairment losses on trade receivables amounted to $20.28 million, while impairment losses on investment totalled $3.02 million.  Notably, Management highlighted  that, “the impairment losses on trade receivables and  investments are related to a revised assessment under the IFRS 9 accounting standard which now  accounts for an estimation of future losses rather than the prior standard of accounting for losses  actually incurred.”

As such, operating profit amounted to $35.84 million, down 50% relative to the $71.59 million reported in 2019. For the quarter, operating loss totalled $12.46 million compared to operating profit of $39.77 million in 2019.

Other income for the nine months ended April 30, 2020 amounted to $2.32 million.

Net finance costs totalled $6.11 million for the nine months ended April 30, 2020 (2019: $15.48 million). Of this, finance income for the nine months amounted to $993,398. However, finance costs closed at $7.10 million for the nine months ended April 30, 2020.

Profit before taxation summed to $32.05 million, down 44% year over year from the $57.46 million booked in 2019. Taxation for the period was $9.88 million (2019: $5.76 million), resulting in a 57% decrease in net profit to $22.18 million (2019: $51.70 million) for the nine months ended April 30, 2020. For the third quarter, net loss was $15.30 million relative to a net profit of $24.11 million booked the corresponding quarter last year.

Management noted that, “Lumber Depot recognizes that the COVID 19 pandemic presents challenges for the Jamaican economy.  Our strategy is to consistently offer competitive prices on our products and to maintain our service standards while prioritizing the safety of our customers and staff.  With our decision to raise equity capital through the JSE, we also benefit from a strong balance sheet that allows us to secure the commercial opportunities that are now available to us.”

Earnings per share (EPS) for the nine months amounted to $0.03 (2019: $0.07). For the quarter, loss per share (LPS) amounted to $0.02 (2019 EPS: $0.03). The number of shares used in our calculations is 706,237,500 units. Notably, LUMBER’s stock price closed the trading period on July 15, 2020 at a price of $1.04.

 Balance Sheet Highlights:  

As at April 30, 2020, the Company reported total assets of $374.01 million. The main contributors were ‘Inventories’ and ‘Investments’ which closed at $104.69 million and $99.86 million, respectively.

Shareholders’ Equity as at April 30, 2020 was $192.24 million. This resulted in a book value per share of $0.27 as at April 30, 2020.

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