Fosrich Announces Management Change; YTD Earnings down 52.1%

  • Junior Market lighting, electrical and solar energy products distributor Fosrich, announced on September 2, 2024, that it had appointed Mr. Ian McNaughton as Chief Operating Officer. Mr. McNaughton will oversee the daily operations of the stores located throughout the island, among other responsibilities.
  • Before joining FosRich Company Limited, he held senior positions in several private sector organizations. The appointment follows the departure of the Operations Manager, Ms. Michelle Thame.
  • At the close of trading on September 5, 2024, Fosrich’s stock closed at $2.24. Its P/E of 74.67x is higher than the Jr Market Distribution Average of 19.06x suggesting that the market may have high expectations of future earnings growth. However, year-to-date earnings are down 52.1% to $77.83Mn. A Decline in revenue (280.19Mn; 13.8%), higher administrative expenses ($129.89Mn; 24.7%) and higher Finance Costs ($32.11Mn; 24.7%) were the primary drivers.
  • Management noted in its 6-Months 2024 interim report that its results were affected by “the substantial fall in PVC and solar panel cost on the world markets, in addition to the slowness in housing-starts locally, caused primarily by the considerable increase in interest rates in Jamaica in the current period when compared to the prior year.” Furthermore, its performance over the last three quarters also coincides with three consecutive quarters of decline in the construction sector. Fosrich’s financial performance is integrally linked to the demand for construction, particularly housing.
  • The construction industry has been burdened by high interest rates for over a year, adversely affecting Fosrich's performance. Although the Bank of Jamaica has initiated rate cuts, it is anticipated that the effects will be gradual and delayed. Consequently, the recovery of the construction industry and housing starts might be protracted, posing additional challenges for the company.

(Source: JSE, Fosrich 6M 2024 Financials & NCBCM Research)