Lights Out! Fosrich Records Loss in Q1

• Amid heightened costs combined with subdued topline growth, Fosrich Limited (Fosrich) recorded a net loss of $68.60Mn for its first quarter ended March 31, 2025n (Q1 2025), representing a reversal from the 32.99Mn profits in Q1 2024.
• Q1 2025 revenues declined by of 0.8% to $852.91Mn, compared to $859.83Mn in Q1 2024. Despite higher sales volumes, revenue was pressured by a sharp decline in global prices for PVC and solar panels; cost reductions that the company strategically passed on to customers to maintain competitiveness. However, the company could experience a turnaround, as management noted that it has not yet begun to benefit from the recent interest rate reductions. These reductions could potentially boost demand for Fosrich’s products, driven by increased construction activity.
• Cost of sales increased by 16.7%, primarily attributable to ongoing disruptions in the shipping industry, particularly those linked to operational challenges at the Panama Canal. These issues led to substantial delays in the transportation of both finished goods and raw materials, leading to higher logistical and operational costs. In light of higher direct costs and lower revenues, gross margins fell to 35.8%, down from 45.3% in Q1 2024.
• In terms of operating costs, administrative expenses for the quarter amounted to $337.37Mn, reflecting an 11.8% year-on-year (y-o-y) increase. The increase was primarily driven by higher staff-related expenses resulting from expanded staffing levels, increased travel and vehicle costs, elevated insurance premiums due to higher renewal rates and increased risk exposure, higher security expenses stemming from additional locations, and increased depreciation charges associated with new fixed assets. Consequently, the company recorded an operating loss of $24.37Mn, down from an operating profit of $93.19Mn in Q1 2024.
• Due to prevailing uncertainties surrounding the macroeconomic outlook, namely, increased tariffs, stricter immigration rules, and reduced government aid, FosRich has announced a temporary pause on its plans to expand into the United States (U.S.) market. The company is expected to monitor the global climate and resume its U.S. expansion efforts when conditions become more favourable.
• Despite this setback, FosRich remains committed to pursuing growth opportunities within its existing markets. The FosRich Superstore and Corporate Offices are on track for completion in Q3 2025. This development is expected to enhance the company's operational capacity and generate additional revenue through lease income. Furthermore, any potential reductions in interest rates could positively influence FosRich by stimulating housing starts, which may, in turn, increase demand for its products and services.
• Notwithstanding its earnings performance, Fosrich’s stock price has increased by 10.7% year-to-date, closing at $2.59 on June 11, 2025. At this price, the stock trades at a price-to-book (P/B) ratio of 6.8x, which is higher than the Junior Market Distribution Sector’s average of 3.8x.

(Sources: FosRich Financial & NCBCM Research)