The Tribune

By NEIL HARTNELL Tribune Business Editor FOCOL Holdings yesterday said it was "well-positioned to improve our financial results for 2012", with previously-implemented initiatives to boost operational efficiencies expected to bear fruits that will filter down to the bottom line. Speaking to Tribune Business after the BISX-listed petroleum products supplier unveiled an 8.2 per cent drop in net income for the year to end-July 2011, Anthony Robinson, FOCOL's managing director, said its elimination of long-term debt during the prior financial year 2010 would enable the company to "embrace new opportunities". Reiterating chairman Sir Albert Miller's statement that FOCOL Holdings would continue to pursue "new business opportunities", such as acquisitions and strategic partnerships where they made sense, Mr Robinson said the company was "confident" it had done what was necessary to further improve its financial performance. Figures released yesterday indicated that the main contributors to FOCOL Holdings' net income decline for the 12 months to end-July 2011 were a reduced gross profit and increased marketing, general and administrative expenses. The end result was a net income drop from $19.032 million in 2010 to $17.741 million. But despite the net income decline, and earnings per share (EPS) fall from $0.47 to $0.41, Mr Robinson said FOCOL's Board and management were relatively happy with the financial performance. "All things considered, we are pleased with the results in light of this current economic environment, and taking into consideration the many initiatives we undertook during the course of the year," he told Tribune Business. Declining to detail these initiatives, on the grounds some were still in progress, Mr Robinson added: "Most of our initiatives were intended to improve operational efficiencies, and it takes time to fall through to the bottom line." Emphasising that FOCOL "absolutely" expected these improvements to bear fruit in financial year 2012, the managing director said: "A lot of times you put things in place, and it takes a while to show up in the bottom line. We are confident, all things being equal, we will improve our financial results. "With the improvement in the economy, along with the initiatives undertaken in the course of last year, all things being equal we feel we are well-positioned to improve the financial results for 2012." Mr Robinson said the internal efficiency/productivity enhancements were a key factor behind the more than $1 million increase to FOCOL's marketing, general and administrative expenses, which rose year-over-year by 3.9 per cent, from $28.402 million in 2010 to $29.5 million. The other drag on FOCOL Holdings' 2011 performance was the reduction in gross profit, which fell 1.7 per cent from $50.115 million in 2010 to $49.636 million. While FOCOL's top-line sales and revenues rose by 25.6 per cent, from $266.92 million to $335.141 million, its cost of sales rose at a faster rate by 31.9 per cent - from $216.405 million to $285.505 million. Mr Robinson told Tribune Business that the higher sales/cost of sales figures resulted from increased petroleum product prices that, in turn, were directly related to global oil prices. The result was gross margin pressure that hit FOCOL's gross profits. "Whenever we have higher prices, that impacts gross margins," he told Tribune Business," because we have more people requesting discounts. The higher the cost of petroleum products, people start to conserve, and there's pressure on to be competitive with prices. "A lot of times when we have high prices, as an organisation we have to make a decision not to pass on the full price to the consumer." FOCOL Holdings, which in 2006 acquired Shell's Bahamian wholesale and retail operations and rights to use the brand, will focus on its retail operations in the coming financial year. Construction of its new gas station at Lynden Pindling International Airport (LPIA) is close to completion, and Mr Robinson said of the facility: "I think it's going to have a positive impact on the Shell brand in the marketplace. "This financial year we're continuing to look for new opportunities, new business opportunities. We'll continue to look for strategic partnerships, and just continue to improve operational efficiencies and respond to the needs of the marketplace." FOCOL Holdings also saw a balance sheet expansion in 2011, with total assets rising from $136.849 million at the 2010 year-end to $165.201 million. Total liabilities almost doubled, from $23.698 million to $46.953 million, leaving total shareholder equity at $118.608 million compared to the previous year's $113.151 million. Mr Robinson explained that the asset growth related to inventory valuation and "cost of product", with the liabilities rise related to "payables associated" with that product. Growth in both indicators was directly related to global oil prices. As a result of eliminating its long-term debt in 2010, the FOCOL managing director said of the company: "It puts us in a very strong position to embrace new opportunities, and to continue to invest in infrastructure, to continue to improve operational efficiencies. We have cash available in the company to do these things, upgrade equipment and upgrade technology." FOCOL Holdings has 335 employees group-wide, and Mr Robinson said: "We are satisfied with the progress we have made over the last couple of years, and will continue to manage the company in a way that it will be well-positioned to compete."