DESPITE facing headwinds in the Jamaican construction sector, Lumber Depot Limited reported 18 per cent profit growth, reaching $126.1 million for the nine months ending January 31, 2024.

Major Noel Dawes, managing director of Lumber Depot, attributed the increase in profits to internal work rather than sales.

“We looked at where we were internally, at where we could cut costs, where we could internally, then we looked at where our margins were and looked at some of the suppliers who were supplying us in terms of what we were getting, and we were able to seek some higher margins from other products,” cited Major Dawes in an interview with the Jamaica Observer.

During the Planning Institute of Jamaica’s (PIOJ) quarterly economic performance and outlook in February, the construction industry saw a 0.8 per cent decline for the period January to December 2023 compared to the previous year. However, Lumber Depot’s controlling costs internally and changing suppliers to ensure product quality were key strategies implemented by the company. This growth came on the back of a marginal rise in revenues, which reached $1.2 billion. Lumber Depot also credited its location in Papine as another crucial factor contributing to its success and had recently carried out investments in the facility, including enhancements to buildings, yard space, and operating equipment. The company also consolidated its operations, outsourcing management services for their accounting department under a lease agreement. In the first half of the financial year, it sought approval from the Kingston and St Andrew Municipal Corporation (KSAMC) to expand the facility in Papine, converting an additional area into its own accounting department.

“It’s not 100 per cent finalised as yet, but it is operational, and we continue to work alongside the leasing team because they are still in training. So I think that by the start of the new financial year, we should have our own financial and accounting services being conducted here at Papine,” Major Dawes explained.

Looking ahead, Lumber Depot aims to capitalise on expansion and acquisition opportunities as economic conditions improve. While actively pursuing opportunities, Major Dawes was reluctant to share more details just yet.

“We are actively pursuing some opportunities that we feel will give us better opportunities in the market, and subject to what comes out of those, we will make an announcement, depending on how that goes,” he told the Caribbean Business Report.

He assured that the company is prudent in the management of its cash and inventory levels, with a focus on maximising shareholder returns and sustaining dividends. Shareholders are being assured that Lumber Depot’s history of consistent dividend payments will be maintained.

“Despite the fact that we are looking at opportunities now, we want to try and maintain that [paying dividends] as we go along. I’m not saying that it’s a board decision that has to be made in terms of that, so depending on what investment we make and how we structure that investment, you may find that there may be a reduction in what is paid, but we always look at that,” said Major Dawes.