ICooled profits hike at Lasco Manufacturing

Lasco Manufacturing’s bottling line.

Lasco Manufacturing generated total revenues of $1.44 billion, 34 percent more than the $1.08 billion in the June quarter of 2014, resulting in a 75 percent jump in profit to $247 million or 6 cents per share from $141 million in 2014 and slightly ahead of the $243 million for the March quarter.
Gross profit margin for the quarter climbed to 33 percent from 29 percent in 2014 but gross profit jumped 50.50 percent well above the growth in revenues, a positive development for continued strong growth in profit going forward.
Operating Expenses climbed 29 percent to $185 while finance cost rose from $32 million to $42 million as a result of construction phase of the factory completed, resulting in the interest on the funds used in construction being expensed as opposed to being capitalised during the construction phase.
With new factory facilities completed and in use, depreciation ended at $67 million for the fiscal year up from $27 million in 2014 but is set to jump in 2016 with only a fraction of the annual charge being booked to March 2015. With more monies to be transferred to fixed assets for the year to March 2016 depreciation cost should climb. At the end of March, net book value of property, plant and equipment amounts to $3.4 billion and includes assets under construction of $1.34 billion. The cost of assets under construction will be depreciated once the property is complete and in use. The estimated additional cost of completion of the facility was $373 million at March, since then more than $150 million was added to fixed assets.

Lasco’s new I Cool drink distributed locally by Lasco Distributors, produced by Lasco Manufacturing.

“Production capacity at the Liquid Plant has already been doubled during this quarter, to meet the overwhelming market demand for our iCool line of beverages. During this year, we will invest further in new equipment to increase its capacity. There will be many more new products to come on line once production capacity is at its normal level”, Chairman Lascelles Chin advised shareholders“. The new Dry Plant at White Marl has now completed the testing and trial phase, and will be fully operational within the next quarter to achieve full efficiency. The existing Red Hills Road operation for this quarter has recorded an increase of 28 percent in net profits over last year. There will be new products coming on stream by the end of the year,” the Chairman further stated.
At the end of the June quarter, Inventories stood at $736 million and is up from $433 million and Receivables jumped to $1.26 billion from $846 million at the end of June 2014. Borrowing stands at $1.86 million against equity capital of $5.8 billion.
IC Insider projects profit at $1.6 billion for the year or 40 cents per share for the year to March 2016, that should jump to around 60 cents for 2017. While the company becomes taxable this year capital allowances plus tax will be a 12.5 percent will result in little or no taxes being paid on profit for the year.
The company is listed on the junior market of the Jamaica Stock Exchange and last traded at $1.90 for a PE of just less than 5 based on IC Insider’s projected earnings. The stock should deliver a healthy increase in price during the fiscal year and the next as the expanded product lines and the new factory deliver increased revenues at reduced cost.
Lasco Manufacturing has been a BUY RATED stock for some time and remains with that status.