Jordan Wood Industries Company seesaws between profit and loss

AMMAN — Despite higher sales and operational profit, Jordan Wood Industries Company (JWICO) posted a JD0.5 million loss during the first quarter of this year.

The loss during the first three months of last year was a few thousand dinars more.

The company, a manufacturer and retailer of wooden kitchens, bedrooms, office furniture and doors, indicated in a disclosure to the Jordan Securities Commission last week that sales from the beginning of this year until March 31, 2015 totalled JD2.3 million, 20.8 per cent higher than the JD1.9 million recorded during the same period of 2014.

JD1.5 million of the sales were in the local market and JD0.8 million were outside the Kingdom.

According to the consolidated interim income statement, reviewed by Ernest & Young/Jordan, operational profit amounted to JD0.4 million during January-March 2015, 101 per cent higher than the JD0.2 million generated during the first quarter of last year

But when taking into account various administrative, selling and general expenses besides a provision for termination of service indemnity and JWICO's share of the loss at a subsidiary, the net result was JD0.5 million loss, a bit less than the loss in the first quarter of 2014.

According to the company's 32nd annual report, 2015 will be a year of thrust to achieve distinguished financial results.

After detailing 2014 achievements, the report indicated that JWICO had secured job contracts in Aqaba, Saudi Arabia, Qatar and others valued at more than JD5 million in addition to stable and promising export markets.

It mentioned that a resident sales agent was appointed in Saudi Arabia, noting that JWICO supplied products to many projects besides other agreements for implementation during 2015.

"In general, the 2015 production schedule requires operating at full capacity," the report said.

It added that after the completion of the company's production and technical capabilities, the management will concentrate on the marketing drive in Jordan and in Gulf Arab countries.

"The main task will not only be meeting the requirements under the contracts signed by the company, but also preparing for fulfilling the additional work that will be provided by key shareholder Arabtech," the report elaborated.

"The management takes it upon itself to markedly raise the volume of sales in 2015 and to take the company back to achieving profits," it stressed.

Last year, JWICO recorded a JD0.1 million profit, ending a series of losses that grew from JD0.5 million in 2011 to JD0.6 million in 2012 and then to JD1.1 million in 2013. In 2010, the company generated JD1.9 million profit.

The company attributed the leap into profitability last year, despite the slight drop in overall sales to JD11.3 million, to lower prices of imported raw materials and the application of a strict cost control mechanism.

Most of the 2014 sales were local and the company was able to increase gross earnings to JD2.9 million from JD2.6 million in 2013.

But selling, administrative and general expenses reduced the figure to a mere JD0.1 million profit. 

Chairman Wassel Issa Fakhoury told the shareholders in the annual report that 2014 was a turning point because JWICO was able to convert the 2013 loss to a profit in 2014.

"Having Arabtech on the board of directors helped increase the opportunities for the company to enter mega projects that will boost its earnings in the coming years," Fakhouri wrote in the foreword.

"The management started in 2014 several initiatives that will contribute to raising operational efficiency through developing cost and pricing systems and applying new computer systems which will have an impact in entrenching a major launch during 2015," the chairman said.

Financially, the balance sheet as of March 31, 2015 showed accumulated losses at JD1.5 million taking into consideration that the shareholders approved during a general assembly meeting in April to write them off from the issuance premium which amounted to JD4.7 million at the end of this year's first quarter.

Cash in hand and at banks as well as cheques under collection totaled over JD1 million, receivables stood at JD2.6 million and inventory was valued at JD4.1 million.

Fixed assets, in terms of property and equipment, amounted to JD7.9 million.

With no bank debt, despite credit facilities extended by Arab Bank and Union Bank for Saving and Investment, the JD4.9 million in liabilities  comprised accounts payable, provisions and other credit accounts.

Capitalised at JD5 million, the shareholders equity included JD2 million in mandatory and voluntary reserves.

Shareholders received JD0.7 million in cash dividends in both 2010 and 

2011.

The annual report put JWICO's capital investment at JD8.1 million.

At the end of last year, JWICO employed 306 workers at its head office and factory in Amman's Muqabalain neighbourhood and its showroom in Mecca Street.

JWICO Investment is a subsidiary (100 per cent) domiciled in Bahrain and engaged in trading securities.

Depa Jordan Investment is an affiliate (30 per cent) also domiciled in Bahrain and engaged in providing advisory services and information to commercial entities.

Key JWICO shareholders who own more than 5 per cent of the capital include: Depa Interiors (36.4 per cent), Arabtech Construction-Jordan (14.6 per cent), American Lebanese Project Development Corp (9.3 per cent), Najib Adel Qubain (5.5 per cent) and Makram Adel Qubain (5.1 per cent).