SEEK notebooks expects to boost SOS revenues:
STATIONERY & OFFICE Supplies Limited (SOS) expects the SEEK brand of notebooks, which it acquired as part of the assets of a manufacturing outfit earlier this year, to earn $120 million in revenues for the stationery and office furniture supplier during its initial year of acquisition.
It would put the total sales of SOS beyond $1 billion.
“We were looking to generate anywhere in the region of $120 million in the first 12 months in terms of the worth of sales from SEEK products. And our target is growing 20 to 30 per cent yearon-year going forward,” said Allan McDaniel, deputy managing director, in response to a Financial Gleaner query at SOS’ annual general meeting at The Knutsford Court Hotel in New Kingston on Tuesday.
In May, SOS started making SEEK notebooks in-house at the company’s Beechwood Avenue, St Andrew complex, said McDaniel. The supply of office furniture, which is also assembled at Beechwood Avenue, remains the company’s main business line.
The prospect for additional acquisitions remains unlikely for the short term as the company needs to consolidate its expansion activities, McDaniel indicated, noting that “we have our hands full”.
The company posted a profit of $44.5 million for the three-month period ending March, up 47 per cent year-on-year. That equated to $0.17 per share for the quarter, compared with $0.10 a year earlier. Also, during the quarter, total assets grew to $676.1 million up from $498 million, or 36 per cent higher year-on-year. The rise resulted from the purchase of new property, a 60 per cent increase in inventory, a 68 per cent rise in bank and cash equivalents, and a 19 per cent rise in receivables.
In April, SOS announced that it acquired the manufacturing assets of Book Empire Limited, which made SEEK notebooks, choir books and writing pads, in a deal worth $80 million. With the acquisition, SOS entered into light manufacturing.
Previously, SOS would outsource the making of its pads and paper stationery. The assets acquired from Book Empire
included ruling machines, guillotines, gluing machines, stapling machines, and book presses. The total value of the purchase was $60 million, financed through a bond issue. McDaniel expects the total investment, factoring raw materials and renovation, to reach $80 million.
With the expansion, SOS will initially be employing an additional 25 persons, pushing total staff to some 130 persons. Bruce Baylis, who headed the Book Empire operations, will continue to oversee the business under SOS’s ownership. The Baylis family will retain ownership of the Book Empire name, while SOS will get the assets and the SEEK brand.
Through SEEK, the stationery company plans to penetrate new markets by increasing sales agents in Jamaica and then regionally, targeting the smaller islands. Book Empire operated from two locations in Kingston, with its main office at Norman Road. Efforts to reach the Baylis family for comment were unsuccessful.
SOS raised more than $96 million in its initial public offering (IPO), with an overwhelming public demand for the stock which was five times oversubscribed. Since then, the stock has grown five-fold to a high of $10 before sliding to $8 per share.
SOS indicated that the funds from the IPO allowed the company to increase its working capital while initiating a series of measures to sustain growth. Part of that effort involved acquiring an adjoining property in an effort to increase the warehousing capacity.
For its December 2017 year end, SOS made $83 million net profit on revenues of $907 million, or 56 per cent more profit and 29 per cent higher sales year-on-year. In March, the company’s sales hit record levels, surpassing $100 million partially due to a government contract.