Mon | Sep 24, 2018

Stationery & Office Supplies profit up 81 per cent

Published:Wednesday | November 15, 2017 | 12:00 AM
Deputy Managing Director of Stationery & Office Supplies Allan McDaniel.

Stationery and Office Supplies Limited (SOS), one of the most recent listings on the Jamaica Stock Exchange (JSE), expects to start utilising an adjoining property to extend its warehouse by December.

Also, the outlook for the ensuing fourth quarter remains strong with sales trending above the previous year.

"Without giving figures, it is looking positive and above last year," said Allan McDaniel, deputy general manager and logistics manager at SOS in and interview with Gleaner Business on Monday.

Initially the company plans to utilise 5,000 square-feet of the 10,000 square foot facility at 34 Collins Green Avenue, St Andrew. It will allow the company to better accommodate its increased inventory at its head office on Beechwood Avenue which runs contiguous to Collins Green Avenue.

"We expect to collect the keys for the premises this week," said McDaniel. The company will do a bit of retrofitting of the floor and start utilising a portion of the premises within weeks. "We will start using 5,000 square feet of the building in December."

The company said it needs the space as its inventory increased 12 per cent to $144.3 million year on year.

The new property will allow the company to initially increase its warehousing space by approximately 10,000 square feet and then scale up to roughly 20,000 square feet with modifications in years to come, which would equate to 57 per cent growth of the Kingston warehousing space, stated the SOS prospectus. Ultimately the acquisition of the property will grow SOS warehouse space in Kingston by more than half of the lands near its head office. Currently, SOS operates from its 35,000 square-foot warehouse, which sits on 58,000 square feet of land.

Concurrently, the company posted pre-tax profit of $18 million for its September third-quarter 2017, up 81 per cent year on year. That equated to earning per share of roughly $0.07 on the company's 250 million share units. Sales for the quarter are up 37 per cent to $233 million for the quarter due to increased customer activity particularly with the expansion of business process outsourcing firms.

SOS has had a sharp rise in revenues which has been "consistent" throughout the year. For the nine months, sales increased 27 per cent to $665 million, with pre-tax profit rising 46 per cent to $69.2 million year on year. The company has maintained a gross profit margin at 47 per cent for the quarter and also for the nine months.

Daniels explained that although larger customers can negotiate project discounts, overall, the company maintains a set margin. The increased cash from the initial public offer allowed the company's cash flow to increase its inventory during the review period.

In July this year, SOS floated 50 million of its total shares to the general public and raised $96 million of equity capital. The initial public offering was priced at $2, but a quarter of the shares on offer were reserved for staff and family members at a discounted price of $1.60.