Wehby

Susan Gordon, Business Reporter

Hardware & Lumber, a GraceKennedy (GK) subsidiary, says it will spend just over $80 million (US$1.2 million) on a new management information system, which its boss Don Wehby expects will help to drive efficiency and squeeze more profit out of the business.

"What we are doing will integrate all the stores, the wholesale and the warehouse side of the business," said Wehby. "This will allow us to improve our purchasing and inventory management and improve our margins."

Hardware & Lumber has been created over the past three years or so as a result of a series of mergers - first between GraceKennedy's hardware arm, Rapid and Sheffield and Hardware and Lumber, which was part of the portfolio of Pan Jamaican Investment Trust (PanJam). Then other Grace entities were pulled in, such as the agricultural products company, AgroGrace.

It became part of Wehby's GK investments portfolio last year when GraceKennedy boss, Douglas Orane, restructured the business into two operating arms - one to cover the core branded food business and the other, the holding company for most other GraceKenndy investments.

Results evident

Wehby says that after more than two years at integrating the companies, the results are beginning to show. The investment in the information system is taking the change forward.

"We have been operating a bit hodge podge," he said. "We have been on two or three systems."

On the face of it, Hardware & Lumber will generate the cash not only to finance the information system, but to return a profit to its owners.

For instance, in this year's first quarter the company realised net profit of $24.6 million, compared to $3 million for the corresponding quarter in 2006. Sales were up over 26 per cent to $1.6 billion.

Wehby, however, reasserted that last year's first quarter was at th of the cement crisis which weakened the construction sector and hit hardware stores hard.

Nonetheless, the impact of the reorganisation within Hardware and Lumber is apparent. "We are seeing some cost benefits of the restructuring," said Wehby.

For example, in the first quarter operating expenses reflected a marginal increase of $23.35 million over the $317million, the amount for the same period last year.

"We have put the restructuring behind us and I am very up beat about the rest of the year," he said.

susan.gordon@gleanerjm.com