Lasco profits up 34 per cent

BY JULIAN RICHARDSON Assistant Business Co-ordinator richardsonj@jamaicaobserver.com

Wednesday, February 15, 2012

LASCO Group's three listed companies posted a combined net profit of $255.8 million for the third quarter ending December 31, 2011, a 34 per cent increase over the corresponding period a year earlier.

But only two of the three entities outperformed the prior period, with Lasco Financial Services seeing its bottom line decline by 28 per cent.

Lasco Distributors posted the highest net profit of $124.3 million over the period under review, more than doubling earnings over the 2010 third quarter. This was against the background of revenues at the company, which distributes pharmaceuticals and consumables, increasing by five per cent to $1.8 billion, and cost of sales and operating expenses both growing marginally.

"The business environment and competitive forces continues to be challenging; there were also uncertainties in the market environment for the peak holiday period in latter part of the quarter," said Peter Chin, Lasco Distributors' managing director.

"The management and staff focused on improving overall efficiencies, service delivery and the execution of planned rollouts of key product extensions in the breakfast, oral care and adult incontinence categories," Chin said.

The company executed organisational changes aimed at adapting and being competitive in meeting present challenges as well as setting the base for achieving the company's long-term objectives, he said.

Lasco Manufacturing posted a 27 per cent increase in third quarter net profit to $118.9 million, but saw revenues dip by three per cent, to $750.6 million. The falloff in revenues was offset by a three per cent drop in operating expenses, a marginal decline in cost of sales, and $7.5 million less in finance costs compared to the 2010 third quarter.

"Our management team is mindful of the challenging economic times we continue to face. However, we continue to focus our efforts to achieve greater efficiency and performance," said Lasco Manufacturing managing director, Dr Eileen Chin.

"Our goal is to build a sustainable and profitable business by positioning ourselves to maintain revenue and profit growth."

Lasco Manufacturing officially broke ground last month for a state-of-the-art factory on 25 acres of land in White Marl, St Catherine. The $2.1-billion development is expected to create 250 jobs and feature a modern and highly efficient processing plant. The building should be complete by April, with production scheduled to start between June and July 2012.

Dr Chin said that, once completed, this expansion would lead to improved efficiencies, productivity and profitability.

"We believe that although the economy in Jamaica will remain relatively stagnant during 2012, the expansion of Lasco Manufacturing's manufacturing facility will strategically position Lasco to take advantage of the current economic environment as well as prepare the company to continue thriving in the global competitive market for future economic changes," she said.

Lasco Financial's bottom line was dragged down by a 33 per cent increase in operating expenses to $57 million, with administrative expenses and costs related to selling and promotion jumping by 36 per cent and 30 per cent respectively. Trading gains increased by nine per cent to $65.2 million while other income increased almost six-fold to $4.2 million.

"Expenses this quarter rose by $14 million, largely due to our expanded network and seasonal activity," said Jacinth Hall-Tracey, Lasco Financial's managing director.

Hall-Tracey said the company expects to see "material improvement of revenues" in the current quarter, against the background of its acquisition of the Money Gram network of Supreme Ventures Financial Services in December.

The Lasco Group of companies listed individually on the Junior Market of the Jamaica Stock Exchange (JSE) in 2010.

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