Cost cuts drive Lasco Manufacturing profit

Sharp cost-cutting and moderate growth in revenues drove profit at Lasco Manufacturing up 29 percent for the December quarter and 30 percent for the nine-month period.
The performance was even more stunning, with pretax profit jumping a very strong 43.4 percent for the quarter and 36.7 percent for the nine months to $1.3 billion as the company profit became subject to full taxation as of October 12 in 2020.
The company maintained a gross profit margin at 36 percent in the quarter, compared to 2019 but enjoyed an increase to 38 percent for the nine months from 37 percent in 2019. It ended the 2020 fiscal year at 37 percent suggesting the 2021 full-year results will most likely end at 38 percent, in line with the nine months’ margin.
The company reported revenues rising 6 percent for nine months to $6.2 billion but up just 3.5 percent to $2.07 billion for the December quarter. Administrative and other costs fell 20 percent for the quarter to $315 million and for the nine months to December by 12 percent to $982 million.
The principal activities of the company are the manufacturing of soy-based products, juice drinks, water and packaging of milk-based products.

Lasco Manufacturing products

Shareholder’s equity stood at $7.5 billion at the end of December 2020 and borrowed funds dipped to $949 million of which $453 million is due for payment within a year. Cash funds and investments amount to $1.7 billion after the company generated funds before working capital and capital financing needs of $1.5 billion. A dividend of $251 million was paid during the nine months.
Lasco generated earnings per share of 25 cents for the nine months up from 19 cents in 2019, while the quarterly 2020 earnings came in at 7 cents. ICInsider.com projects earnings per share at 35 cents for the year to March and 40 cents for the 2021 fiscal year.
The stock last traded at $4.32, with a PE ratio of 12.3. The stock is undervalued based on the earnings and an average market PE of 15 and a target PE ratio of 20 that many stocks are currently trading around. The target price of $7.

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