FosRich losses double as solar panel prices fall faster than distributors can keep pace

Solar panel prices are falling faster than distributors can adjust, and for FosRich Company Limited, the result is a business that moves more product but collects less money for it.

The challenge is compounded by an unregulated local market where a growing number of importers compete on price with few barriers to entry.

“Our turnover numbers continue to be affected by the substantial fall in solar panel cost on the world markets, which affects our business,” Managing Director Cecil Foster said in the company’s quarterly report. He added that uncertainty in the United States had prompted some global suppliers to offer more favourable credit terms to non-US distributors such as FosRich, providing “measurable benefits”.

Despite the revenue decline, FosRich’s gross profit margin edged higher to 39 per cent year to date from 36 per cent a year earlier – a sign that the company is maintaining its markup even as the dollar value of each sale shrinks. Solar products remained one of the group’s key revenue generators alongside hardware, LED products, PVC items, and wiring devices.

The Junior Market-listed electrical and solar energy distributor reported a net loss of $265.2 million for the three months ended June 30, more than double the $121 million loss recorded a year earlier. Quarterly revenue fell 46 per cent to $397.2 million from $734.4 million.

For the six-month period, revenue slumped to $812.3 million from $1.59 billion a year earlier. Losses widened to $444 million from $189.6 million, and loss per share deteriorated to nine cents from four cents.

The root of the problem

Global solar module prices have fallen by more than half since early 2023, driven by Chinese overcapacity that has pushed manufacturing capacity to more than double annual demand, according to the International Energy Agency. Oilprice.com reported on Thursday that panel prices have dropped 90 per cent over the past 15 years.

For manufacturers, falling input costs can be absorbed. For distributors like FosRich, the dynamics work in reverse. The company purchases and ships panels at prevailing prices, but by the time inventory clears Customs and reaches a Jamaican warehouse, the global market may have moved lower – eroding the resale price, particularly amid heightened competition.

Any business can import and resell panels, and as global prices have collapsed, the number of players entering the space has grown – compressing margins for established distributors such as FosRich that carry higher fixed costs.

The damage came not from margins but from the mismatch between falling revenue and fixed overheads. Administrative costs for the first half totalled $680.3 million, broadly flat against $677.8 million in the prior year.

The recovery plan

FosRich has endured three consecutive years of declining earnings, with net profit sliding from $325 million in 2022 to $235 million in 2023 and $34.5 million in 2024, according to the audited results. The downward trajectory culminated in a net loss of $506 million for the 2025 financial year.

To stem the losses, Foster said management is pursuing a recovery plan. One measure includes opening its Molynes Road superstore by September.

“We anticipate commencing activities at our new superstore by the end of the third quarter, which will contribute significantly to our top line and cash flows,” Foster said.

Inventory rationalisation is another priority. FosRich’s inventory stands at $2 billion – roughly equivalent to a year of sales at the current rate, tying up capital the company needs elsewhere. Management is also tightening administrative spending and pursuing partnerships with property developers to drive demand for its electrical, lighting, and solar products. The company is planning a sale-and-leaseback of its real estate assets aimed at retiring loans and freeing cash to support inventory purchases. Management said the combined initiatives are expected to generate an “increase in sales”.

neville.graham@gleanerjm.com