Lumber Depot’s Q1 Results Impacted by New Tax Charges

• Lumber Depot Limited (LUMBER) reported net profit of J$37.93Mn, for the first quarter ended July 31, 2025 (Q1 2025), reflecting a 16.1% year-over-year (YoY) decline. This was primarily due to the introduction of an income tax charge following the company’s transition from the JSE Junior Market tax exemption regime.
• Revenues grew 3.9% YoY to close at J$401.54Mn, driven by steady demand in its Papine hardware operations. However, sales were skewed toward basic construction commodities and accompanied by continued price competitiveness, which tempered revenue growth.
• Direct expenses also rose by 6.1%, outpacing revenue growth. As a result, gross profit slipped 3.1% to J$89.23 million, while gross profit margin declined by 16 basis points to 22.2%.
• That said, operating expenses were contained (-4.9%), allowing the company to deliver an operating profit of J$44.23Mn, which was relatively flat compared to Q1 2024 J$44.68Mn.
• However, with the expiration of its five-year 100% tax remission in December 2024, the company has income tax expense, which it did not incur in the prior year. Consequently, LAB incurred J$5.42Mn in income tax during the quarter. This new tax charge weighed on the bottom line and drove the 16.1% YoY decline in net profit.
• Management noted that the company continues to maintain a strong market presence in Papine, supported by its owned facility and high community traffic. It is also actively exploring expansion opportunities, including investment in adjacent properties to broaden its footprint. If successful, it would allow the company to expand its operations to better serve its market, with the potential for improved earnings.
• Lumber’s stock price increased by 1.1% year-to-date, closing at $2.76 on September 16th.

(Sources: Lumber Depot Ltd. Unaudited Earnings Release & NCBCM Research)