Hardware & Lumber says developers lagging on trade debt
Some hardware wholesalers and developers are increasingly finding it difficult to pay debts owed to Hardware & Lumber Limited (H&L), pushing three-month receivables at the island's largest construction retail chain above $103 million.
Bills unpaid for three months are up 22 per cent higher year on year at H&L, which operates 10 Rapid True Value stores and eight AgroGrace stores.
Still, the H&L directors say the company has a solid platform from which to launch into the future, according to the annual report, which describes the ownership transition form GraceKennedy to Argyle Industries as "seamless".
The bulk of its trade receivables are older than 90 days, but those older than four months - totalling $97 million - have also grown by 28 per cent in the last financial year. H&L made a provision for $80 million and expects to recover some of those impaired receivables.
"The individually impaired receivables mainly relate to wholesalers and developers who are experiencing difficult economic situations. It was assessed that a portion of the receivables is expected to be recovered," said the annual report.
The company earned net profit of $164 million on revenues of $7.4 billion in its last financial year ending December 2015. Its total receivables are relatively low at $388 million, some $170 million are past due but not impaired.
The bulk of H&L's revenues, $5.7 billion, came from the household, hardware and building products segment, trading as Rapid True Value. Sales for the agricultural products and equipment segment, trading as AgroGrace, totalled $1.7 billion. The AgroGrace segment which provides solutions to the agricultural sector, was negatively impacted by the extensive drought during the period, reminiscent of previous year, the company said. Revenue fell 4.3 per cent in that segment.
H&L, which changed ownership at the end of 2015, indicated that it will receive an injection of funding to refinance existing loan balances, provide lines of credit to suppliers, and boost working capital.
"The vision is being reshaped as the new board and management team of the company align themselves to promote the growth of the business. We have already begun to see the results, with profit after tax for the first quarter in 2016 trending upwards compared to the same period in 2015," said the company, which continues to be chaired by Erwin Burton, a former GraceKennedy executive. Donna Doran is CEO.
Argyle Industries includes a group of investors led by Bahamian investment company Abbeco Invest SA, and Greystone Equity Partners Inc, along with its affiliates and associates.