Hardware and Lumber Limited, operator of the Rapid True Value chain of stores, has reported a stellar 332 per cent rise in annual net profit, stemming from more improved sales in 2012.

Its operating performance was also more robust, doubling to a profit of J$167 million from J$80 million the previous year.

But Hardware and Lumber was also hit with particularly high tax bill of J$73 million, which amounted to 73 per cent of its pretax income.

The tax charge pushed net profit down to J$27.18 million, but those results nevertheless tripled the J$6.3 million of profit reported by the hardware company in 2011.

H&L paid a dividend of J$0.125 per share in January, "being the first declaration in five years", the company said. The distribution amounted to J$10 million, most of which would have flowed to parent company GraceKennedy, followed by minority partner Pan-Jamaican Investment Trust.

The dividend distribution is H&L's clearest sign to date to shareholders that it has emerged from a period of long-standing losses and weak returns. The improved showings followed a reimaging of the stores that formed part of a turnaround plan for the chain.

The company said that all three reporting segments - wholesale, retail and agriculture - had improved results at financial yearend December 2012.

"This improved performance was delivered through improved product mix, more effective promotions as well as better margin and inventory management," said H&L.

The company took in total revenue of J$6.3 billion, or close to four per cent higher than the previous year's turnover of J$6 billion.

The large tax charge in 2012 and recent changes to the corporate income tax regime "triggered a one-off non-cash, tax expense of J$39.2 million", said H&L

The corporate tax rate was reduced from 33.33 per cent to 25 per cent and became effective January 1, 2013.

"The health of the company's balance sheet is improving, even as we ensure that the assets are fully employed in our trading activities. We have mitigated our exposure to foreign exchange losses by converting all loans to Jamaican dollars. Focus on working capital management during the year has resulted in a reduction in inventory levels by 14.1 per cent," the company said.

The company closed the year with net assets of J$1.64 billion.

marcella.scarlett@gleanerjm.com