Ashford W. Meikle, Staff Reporter
Orane (left) and Mahfood (right)
WITH A strong across-the-board performance of its business segments, the Hardware and Lumber Group has returned an impressive 109 per cent increase in its revenues for the year ended December 31, 2004, according to its audited results. The group earned total revenue of $5.5 billion, or almost $3 billion over 2003.
H&L posted a strong 279 per cent increase in its net profit, which jumped to $169 million.
Every segment of the group's operations reported growth in revenues of over one hundred per cent.
The wholesale segment recorded 139 per cent increase in its revenues, moving to $2 billion. This division contributed 33 per cent to the overall operating profit of the group. In their statement accompanying the results, chairman of H&L, Douglas Orane, and group chief executive officer John Mahfood noted, "the strong performance experienced in 2003 continued in 2004. We also benefited from the demand for building materials following Hurricane Ivan."
The next big performer, the retail division, grew by 141 per cent and in fact was the biggest contributor to the group's operating profit.
OPERATING PROFIT
Posting profits of $150 million, the retail segment contributed almost half 46 per cent to the group's operating profit.
The next segment, agricultural products and equipment experienced a strong 120 per cent increase in its revenue of $843 million and accounted for almost 17 per cent of consolidated operating profit. According to Messrs. Orane and Mahfood, "Agro-Grace was negatively impacted by these events, but was still able to produce commendable results."
The other category returned an impressive 109 per cent growth, contributing four per cent to Hardware and Lumber's operating profits.
NO SURPRISE
The explosive growth in the retail segment is not surprising. At last year's annual general meeting, John Mahfood signalled the group's intention to focus on customer service, investing in information technology and closing smaller stores, while opening larger entities across the island. Plans were also announced to convert the Rapid Sheffield stores to True Value outlets.
"Our Portmore and Montego Bay stores have been reset and remerchandised and we have begun to benefit from this in terms of sales," said Messrs Orane and Mahfood. They noted, "The remaining stores will be merchandised during 2005. Construction work commenced on our new store in Ocho Rios and completion is expected in mid 2005."
Management has, in the past, said that the expansion into the rural areas is strategically aimed at establishing H&L as the first islandwide hardware store network.
The group has also embarked on a major customer service thrust. Last year, for example, AgroGrace launched its Gardeners Club in an attempt to tap into the domestic gardening niche. Up until that time, the company had focused heavily on the agriculture sector. "Our objective is to take the hassle out of the shopping experience by providing advice as well as assistance in sourcing products," said retail manager Olive Downer-Walsh, in explaining the concept behind the Gardeners Club.
The group has also invested about US$1 million in a new information technology system (ITS). The aim of the ITS is to provide the stores with an efficient point of sale system, improve procurement and provide management with accurate information especially as it relates to inventory.
GraceKennedy Limited owns approximately 70 per cent of the Hardware and Lumber group, while Pan Jamaican Investments owns 25 per cent. Its subsidiaries are H&L True Value, Agro-Grace and Rapid Sheffield Limited.
