Carmanah’s Sales Boom, But Costs Cut into Profits for Lighting Systems Maker

March 20, 2006
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Sales of its energy-efficient products jumped 144 per cent, but the increase in profit for Victoria’s Carmanah Technologies Corp. (TSX:CMH) was a relatively small 15 per cent.

The manufacturer of solar-powered equipment, LED lighting systems and signage saw sales of $38.7 million for the year ending December 31, 2005. That was a 144 per cent increase from sales of $15.9 million for 2004.

The large increase was due primarily to the sales from its acquisition of Soltek Powersource Ltd., one of the largest Canadian suppliers of proprietary solar power systems and solar power equipment.

The company recorded sales of $15.5 million in its solar power systems group alone within the last six months of 2005 following the acquisition. Sales from its solar LED lighting group increased to $18.4 million compared with sales of $13.3 million in 2004. Sales in its LED sign group increased to $4.7 million from $2.6 million.

Despite those strong sales, however, increased company’s costs ate into Carmanah’s profit for the year.

Costs from sales rose to $24.3 million, consuming 63 per cent of sales income, compared with costs of $7.6 million that consumed only 48 per cent of sales income in 2004. So, for the year, net earnings increased 15 per cent to $680,962 in 2005 compared with profit of $592,823 in 2004.

Carmanah shares have been trading between $3.75 and $4.19 in the past week, reaching a new 52-week high of $4.19 and off a 52-week low of $2.45 reached in April 2005.