Stung by a dramatic decline in profit to half its previous levels, air conditioning company CAC 2000 Limited is now looking to retail to gin up revenue.
CEO Gia Abraham says the company will open a retail store in Village Plaza by the end of January. The relatively small outlet, at 1,200 square feet, will share space with Enrvate, which is in the market supplying items for renewable energy products.
CAC and Tropical Battery Company are joint-venture partners in Enrvate, a start-up that’s in the business of customising energy solutions.
Abraham says CAC 2000 will use the shop space to get closer to its client?le, supplying air purifiers, mini-split air conditioners and other items that would normally be supplied from its Marcus Garvey Drive complex.
“We’re hoping to have the space outfitted either for Monday coming or the following week. We’re looking forward to the location from the standpoint of visibility and accessibility, “Abraham said.
She also nodded to other possibilities to grow CAC 2000, in a hint at potential merger and acquisitions, or M&A, activity but offered no specifics.
Although CAC 2000 managed a six per cent improvement on its yearly revenue, which rose from $1.04 billion to $1.11 billion at year ending October 2022, the company also spent more to operate than the previous year, which served to compress its bottom line.
Some of the added costs, Abraham said, related to professional fees incurred following the exit of the company’s controller at a sensitive period. The preparation of the accounts had to be outsourced as a result.
“Where we would have had somebody working in the company, at that time it was fully outsourced. We filled the position in August, and having not released those persons, our professional fees were much higher than we normally would have had,” the CEO said.
Additionally, the company had faced delays in shipments since the pandemic, which Abraham said impacted the execution of jobs for clients, but the backlog of items are now flowing in.
“We had about $300 million worth of projects being affected by this,” she said. “We’re still seeing supply chain issues; delivery times have changed dramatically,” she added.
Previously, the company could bank on delivery times of 12 to 16 weeks, but the new normal has pushed the period out to 18 to 34 weeks.
Abraham had previously reported that in order to compensate for the logistical challenges, CAC 2000 had to bulk up on inventory. This had the effect of driving up the company’s finance charges, affecting cash flow.
In the year just ended, the company’s cost of inventory utilised during the course of business throughout 2022 rose from $533 million to $618 million. At year end, the value of CAC’s inventory was estimated at $578 million, up from $465 million the year before.
The squeeze on cash flowed straight to the company’s bottom line, with earnings of $20.4 million, reflecting a dramatic fall of 49 per cent from $39.8 million the previous year.
“Although 2021 was the COVID-19 year, for me it was an easier year than 2022,” said Abraham.
“The supply chain issues, work-from-home, and so on affected us more in 2022 than 2021,” she said.