SOS “Books” Lower Q3 Earnings Due to Surge in Operating Expenses

  • Stationary Office Supplies (SOS) booked a 3.3% earnings decline to $59.31Bn for the Q3 period ending September 30, 2025. The decline occurred as revenue growth was outdone by rising operating expenses.
  • Q3 revenues totalled $504.77Mn, up 12.6% year-on-year (YoY), keeping it on pace to $2.0Bn in annual revenues. The growth was supported by rising export orders and the launch of the Company’s online sales platform, which has begun to generate sales.
  • COGS grew more slowly relative to revenue growth (9.9% to $220.28Mn), reflecting strategic purchasing practices, including larger-volume orders to reduce the cost of goods. This caused gross profits to increase 14.7% to $284.47Mn and gross margins to improve to 56.4% from 55.3% in Q3 2024.
  • Meanwhile, operating expenses increased by 19.9%, driven primarily by higher base salaries and the continued recruitment of highly qualified personnel across departments. This ate into previous efficiency gains, resulting in operating profit showcasing only a 2.5% improvement to $62.07Mn.
  • Despite the 2.5% operating profit increase, pre-tax profit declined marginally by 3.0%. This was primarily attributable to lower finance income generation, marginal realised loss on investment and the absence of a one-off gain on the disposal of fixed assets of $5.57Mn.
  • With the Q3 2025 period folded into the year-to-date (YTD) performance for the nine months ended September 2025 (9M 2025), the company achieved the second-highest YTD revenue in its history, trailing 2023’s outturn by only 3%. However, the upward pressure on operating expenses erased these gains. 9M 2025 earnings were $154.18Mn, a 22.3% contraction compared to the 9M 2024 period.
  • Looking ahead, SOS seeks to benefit from the rebuilding effort as it will require massive amounts of administrative and construction-related supplies (paperwork, planning materials, temporary office setups). This could create a significant, albeit delayed, short-to-medium-term surge in local demand for SOS products.
  • As at the close of trading on Tuesday, SOS’s stock price closed at J$1.75, reflecting a 4.2% year-to-date increase. At this price, SOS trades at a P/E of 21.9x, which is below the Junior Market Distribution Sector Average of 23.3x.

(Sources: JSE & NCBCM Research)