H&L to invest $112million in new MIS System in 2005
The Hardware & Lumber Group invested $69 million, of a projected capital expenditure of $112 million, in a new Management Information System to improve operational efficiency and customer service. According to Chief Executive Officer, John Mahfood, the investment includes significant development costs for the January to June 2005 financial reporting period but the benefits would be realized in future periods. “ We are already receiving positive customer feedback on the new system which is now in place in our Sovereign, Lane and Manor Park stores”, said Mr Mahfood.
Hardware and Lumber’s Renounceable Rights Issue was completed in the second quarter and resulted in a net inflow of $336 million. This is being used to pay down debt and finance capital expenditure including the construction of the new store in Ocho Rios which is scheduled to be completed in the fourth quarter.
The Group achieved revenues of $2.713 million, reflecting an increase of $152 million or 6% over the corresponding six-month period of 2004. The net profit attributable to stockholders decreased by $20.8 million compared to 2004, moving from $55.2 million to $34.4 million, a decrease of 38%. This represents earnings per stock unit of $0.48. Based on the actuarial review done earlier this year, the group booked an expense of $10 million for the first six months relating to retirement benefits in accordance with IAS 19.
Mr. Mahfood reported that the general business climate for hardware business continued to be very challenging in the second quarter. “The heavy rains in May and June impacted negatively on our performance. This came at a period when we were already experiencing high interest expenses due to the high inventory levels carried over from the build up of inventories during the post Hurricane Ivan period,” he explained.
Sales in the Group’s retail division increased by 9% over 2004, while profit declined by 7.2%.
The wholesale division continued to operate in a highly competitive climate as other wholesalers, also overstocked, reduced their prices in order to move their inventory.
The agriculture division turned in an excellent performance in the second quarter with increases in both sales and profit. Sales increased by 4.7% over 2004 while profits increased by 87.8%.
“We expect to see an improvement in our results for the second half of the year due both to the general improvement in construction activity as well as specific actions that we are taking to improve our cost structure”, said Mr Mahfood.
