MDS ekes out small profit in June quarter
Published:Friday | August 30, 2024 | 12:09 AM
After a string of negative quarters that have dogged Medical Disposables & Supplies Limited, MDS, the distribution company has turned a first quarter profit for the period ended June, and CEO Kurt Boothe is cautiously optimistic about future prospects.
“We want to be cautious in making our projections but what I’d want to say at this juncture is that all our strategic efforts are focused on getting back to black,” Boothe said.
The next three quarters should also show better results, given MDS’ improved cash flow and smaller debt burden, he said.
MDS spun from a small loss of $110,000 to a tiny profit of $2.16 million in the April-June period. The turnaround came on the back of a five per cent improvement in sales, which grew from $925 million to nearly $973 million, in a year on year comparison.
The distribution company’s operational cash flow closed the quarter in deficit of $6.6 million, but that outturn was greatly improved relative to the $284 million deficit reported in June 2023. Its overall cash position, at negative $107 million amid debt repayments, deteriorated relative to a year ago, when its net cash was in deficit of $80 million.
Lingering effects of pandemic
Boothe says there were two main factors that assisted the June quarter turnaround: improvement in operational efficiency, and finally breaking the back of the lingering effects of the COVID-19 pandemic.
“We had severe stocking issues. In some instances, we were burdened with overstock and then some and in other cases we were suffering stockouts,” Boothe said.
To bring inventory levels under control: “We had to institute price cuts, and we certainly sacrificed some of our margins,” he said in an interview with the the Financial Gleaner.
Like other Jamaican companies, MDS was also hit by supply chain challenges that manifested in the price of shipping and delayed deliveries.
Beginning 2021, the medical supplies company grappled with shipping rates that grew tenfold in some cases, US$1,800to US$18,000. In addition, there was a shortage of shipping containers, especially coming out of Asia, leading to the inability to plan due to uncertainty of shipping schedules. To compensate, many importers bulked up on inventory, which sometimes led to overstocking or were unable to serve clientèle due to a lack of supplies.
Meanwhile, Boothe said the business that MDS acquired in mid-2021, Cornwall Medical and Dental Supplies Limited, needs tweaking regarding its logistical arrangements.
“The performance is steady, but our main challenge is just to get the logistics right. We have to find the right balance. We need to establish a proper rhythm with purchasing, sourcing and supply chain,” Boothe said, adding that the company’s technology platform can be expanded to help meet that goal.
MDS is currently recruiting talent to fill clear vacancies in the area of technology and logistics, and expects to onboard new hires within two months.
Montego Bay-based Cornwall Medical is an islandwide distributor of medical equipment, medical disposable products and dental supplies, as well as operator of the Corn-Med pharmacy chain, which has two outlets in Montego Bay and one in Savanna-la-Mar.