FosRich Sees Fall Off In Bottom Line

Electrical, lighting and solar products distributor Fosrich Limited recorded a net profit of $40.77Mn for the quarter that ended June 30, 2023. This represents a 70.7% yoy decrease in profitability. Similarly, profit for the six months ending June 2023 decreased by 45.5% to $162.50Mn.
Revenue for the quarter was up by 4.7% yoy to $940.85Mn. On the other hand, revenues for the six months increased by 12.5% yoy $2.02Bn and was driven by increased sales in eight of its twelve product groups.
Cost of Sales for the quarter amounted to $569.00Mn in the quarter ending June 2023, a 14.3% increase relative to last year’s. For the six months ending June, the cost of sales was up by 19.4% to $1.21Bn. This was driven by higher copper and PVC ingredient prices on the international market. Consequently, gross margin fell to 39.5% (from 44.6%) and 40.4% (from 43.8%) respectively, over three months and six months period ending June as increases in costs outpaced revenue growth.
For the quarter, administrative expenses were 26.9% higher yoy at $266.52Mn, while for the six months, administrative expenses were up by 30.0%. The increases were driven primarily by increased staff-related costs for salary adjustments, increased sales commission due to improved sales performance, and improvements in staff benefits, among other expenses.
FosRich’s stock price has decreased by 46.3% since the start of the calendar year. The stock closed Tuesday’s trading session at $2.10 and currently trades at a P/E of 72.3x which is above the Junior Market Distribution Sector Average of 15.2x.
The company has announced that construction of its new Superstore & Corporate Offices at 76 Molynes Road has commenced. The completion date is projected to be Q2, 2024. Additionally, the company recently announced that it was at the stage where it is ready to commence the production of transformers, which is expected to strengthen the partnership between the company and JPS while providing value for shareholders.

(Source: JSE)