SOS profits slow but strong finish projected
Published:Friday | November 29, 2019 | 12:00 AM
Stationery & Office Supplies Limited, SOS, which trades in office furniture, expects a positive fourth quarter as it strategises to keep expenses flat after a slowdown in September.
Deputy Managing Director Allan McDaniel said the firm is generating business from medium-sized call centres and banks.
To meet this demand, SOS started buying inventory more evenly throughout the year, which will spread costs over more quarters. This strategy, McDaniel said, will allow the company to avoid the heavy expenses that hit the firm back in the fourth quarter of 2018, when it posted a loss of $17 million.
“So, the outlook is very positive and we are looking at a strong final leg,” he said.
McDaniel explained that the third quarter suffered from commissions paid to selling agents and the depreciation of the currency.
“I would remind people to look at the second quarter, which was very strong, but the commissions on those sales would have passed through in the third quarter,” he said.
Sales in the third quarter rose 4.5 per cent to $294.7 million, and by 16.5 per cent to $933 million over nine months. Pretax profit for the third quarter at $22.4 million declined 37 per cent, while year-to-date profit is 24.5 per cent.
The SOS stock is up 34 per cent year to date at $11.19 per share, but off its high of $16.35 in August.
McDaniel told the Financial Gleaner that the company continues to pay down on its debt while growing its capital. It isn’t looking to borrow at this time, but says that if opportunities arise the attractiveness of its balance sheet will allow it to raise fresh capital.
SOS’ book value has grown 20 per cent to $596 million in the past year.