MDS looks to heal from losses

Medical Disposables & Supplies Limited (MDS) remains positive despite its year-to-date losses.

“We maintain a positive outlook for the year ahead, despite the current challenges which we face,” stated Chairman Winston Boothe in his address in the annual report released on the weekend. “But wish to recommit ourselves to the achievement of a high standard of performance in order to increase shareholder value by providing an appropriate return on their invested capital.”

MDS, which supplies hospitals and pharmacies with medical supplies, recorded its first annual loss since listing on the Jamaica Stock Exchange a decade ago. It recorded losses of $316 million compared to profit of $80 million a year earlier.

The company executives reasoned that shareholders should expect recovery in the short to medium term. In the process however the loss wiped out one-quarter of its capital to $885 million from $1.2 billion a year earlier. The financial setback was blamed on the “lingering adverse economic effects of the COVID-19 pandemic period”, during which the company experienced “supply chain” and other logistics issues, according to Boothe in the financials. He added that it resulted in significant increases in freight and other related costs, all of which still obtain.

The continued supply chain hindrances during this period resulted in severe overstocking that in turn plagued the company performance in a number of areas,” stated the company led by the Boothe family in its annual report released on the weekend. The report was delayed for some time as the company released unaudited second-quarter results to September 2024.

Much of this inventory had to be liquidated with heavy discounting which affected top-line margins, MDS indicated.

“One bad year does not narrate the entirety of our story,” said CEO Kurt Boothe in the annual report.

“Also a large portion of stock was written off as expired, which also anchored the bottom line,” it added. Despite these difficulties, the company remains optimistic about its future.

MDS’s journey over the past decade has been characterised by growth. The company has expanded its bottom line exponentially, increased its property and facilities, and executed its first business acquisition. Additionally, MDS has made strides in improving its IT support, enhancing cybersecurity measures, introducing digital solutions for internal operations, and diversifying its portfolio through the establishment of a consumer division. These moves have helped the company enter new customer segments and strengthen its brand presence.

The loss, however, underscores the challenging market and the impact of the pandemic. An increase in finance costs, driven by heightened borrowings to support operations and the write-off of expired inventory, significantly impacted profitability. To counter these setbacks, MDS has outlined a recovery plan focused on reducing post-pandemic stock levels, managing debt, improving gross margins, and controlling costs.

While the company faced an 7.6 per cent decline in gross margins to 19 per cent, its leadership has emphasised resilience.

business@gleanerjm.com