SOS expanding to meet rising demand
Published:Friday | May 19, 2023 | 1:21 AMKarena Bennett - Business Reporter
Stationery & Office Supplies Limited is adding another warehouse on its Beechwood Avenue, Kingston property as storage for its SEEK notebook manufacturing business, as well as an open area to host clients.
The project, set for completion in late 2023, is budgeted at $60 million.
“The warehouse itself will be 5,000 square feet, while the entire expansion project will span 7,000 square feet,” SOS said. The warehouse will provide storage for up to 200 inventory pallets for the SEEK notebook brand.
The company is also upgrading its delivery fleet, with three additional units planned to serve Kingston and Montego Bay.
“Our Montego branch will also get some needed upgrades as we have signed an agreement to double our storage capabilities, resulting in increased inventory for Montego Bay. This is a necessity, with Montego Bay experiencing an uptake in tourist arrivals, allowing hotels, restaurant and several other businesses to once again have an opportunity to flourish,” Managing Director Allan McDaniel said in a statement issued with the company’s March quarter financial results.
Profit for the quarter dipped to $94 million but sales climbed by 22 per cent to $519 million.
The budget for the Montego Bay expansion is still being computed.
Aside from a physical expansion, SOS is also bullish on broadening its customer base outside of Jamaica. During the first three months of the year, SOS said it secured a contract with its regional distribution partnership based in Trinidad & Tobago, The Office Authority, for two containers of goods.
In the second quarter, two more islands in the region are scheduled to begin distribution for SOS.
“Unfortunately, these details cannot be shared at this time as agreements are still being finalised. We welcome a follow-up on the same in June,” the company said via email, in response to questions from the Financial Gleaner regarding the regional projects.
FY 2022 was a historic year for SOS which, after a 57-year run in business, hit a record $1.75 billion in revenue and $283 million in pre-tax profit. The company, which has stated its intention to not only replicate what it did in 2022, but to surpass the company’s best financial year, has reported strong sales for the first quarter of 2023.
“The first quarter of 2023 has turned out, once again, to be our best quarter in the history of the company,” McDaniel said, basing his comment on the company’s pre-tax performance which improved by four per cent to $108 million, as well as the extraordinary gain booked the year prior.
In the January to March quarter, the company paid taxes of $14 million, as opposed to zero in the comparative 2022 period when, as a junior market company, it was still benefiting from a full waiver of income taxes. It’s now only allowed a 50 per cent waiver.
“With all the growth in the business, it would normally look disappointing to see that the pre-tax profit only increased by four per cent, but this can be explained, as during the first quarter of 2022, SOS realised a capital gain of $23 million based on the sale of its Collins Green property. Without the benefit of this one-time sale included, the profit year-over-year would have been 34 per cent,” McDaniel explained.
SOS earns from the SEEK notebook business, document destruction services, the sale of fireproof safes for home and office, and office furniture and supplies.
During the quarter, revenue growth largely came from the SEEK business, which was up 60 per cent year-on-year, followed closely by the Sentry Safe division at 51 per cent. Document destruction grew 48 per cent year-on-year, while business from EVOLVE furniture was up 30 per cent.
Sales from the Montego Bay branch have increased by 50 per cent, from $44 million to $66 million, the company said.