FosRich earnings spike, led by uptake in pipe supplies
Published:Friday | August 6, 2021 | 12:09 AMNeville Graham - Business Reporter
Cecil Foster originally projected it would take 14 months for his investment in PVC pipe manufacturing to pay off.
But the level of demand has been greater than initially forecast, leading his FosRich Company Limited to ramp up capacity, including the addition of a third production line recently.
The electrical lighting company diversified into pipe manufacturing in March 2019 and the venture is already turning a profit, said Foster, the founder and CEO of FosRich.
“Nine months after we started production, by December 2019, we were five months ahead of projections, and that gave us the confidence to invest even more to deal with demand,” he said.
“Customers have gone as far as to make large purchases, but due to a lack of storage space, they’ve asked us to keep it for them and they draw down on the stocks as needed.”
Foster says the third line was installed to expand capacity, but also to build in a level of redundancy that can be utilised when demand spikes, or system capacity is taken offline either for routine maintenance or in cases of equipment breakdowns.
In two years, FosRich has invested $230 million in the pipe production unit – $150 million on the plant at Maverly Avenue in Kingston, and another $80 million on another production line in Clarendon that will be dedicated to producing pipe fittings such as angles, joints, tees and unions, and accessories such as bends and specialist joints.
“We are testing as we speak, and in coming days we should start full production. We’ll have more to say on that,” Foster said.
Additionally, by the end of September, FosRich expects to start producing industrial-grade PVC pipes measuring 150 millimetres or six inches and above. The Clarendon facility is also home to a transformer repair operation, where FosRich rehabilitates transformers for power utility Jamaica Public Company Limited, currently the unit’s sole client.
At half-year, January to June, FosRich earned $1.1 billion in revenue, a 28 per cent increase from $857 million for the similar period in 2020. The company says it found itself in a better position to supply market needs, with product lines such as PVC increasing 105 per cent; hardware, 93 per cent;, wiring devices, 52 per cent; and control devices, 48 per cent.
The company reported net profit of $115 million, up $92 million, or 414 per cent, from $22 million in 2020.
As a trader of electrical products, FosRich distributes switchgear and electrical panels for German company Siemens, wiring and solar cables for French company Nexans, and household and industrial led lighting made by American companies General Electric and Phillips. It’s also a tier-one distributor of solar inverters in the Caribbean for Huawei Futures.