Lasco Manufacturing Q1 profit up 19%

Revenues at Lasco Manufacturing rose just 3 percent in the June quarter to $1.79 billion but improved profit margin lifted profit after tax by 19 percent to $282 million.
The slow growth in the quarter contrast to a 6 percent rise in revenues in the fiscal year to March 2019 when the company posted revenues of $7.6 billion. The June quarter’s revenues are lower than the $2 billion achieved in the March quarter but are consistent with September and December quarters last year with $1.7 billion and $1.8 billion respectively.
Operating cost rose 7 percent to $330 million but cost of sales declined to $1.19 billion from $1,125 billion in 2018 with the change resulting in gross profit margin rising to 37 percent from 35 percent in 2018. Finance cost was virtually flat at $32 million but taxation rose from $34 million to $40 million. Lasco generated other income of $17 million in the quarter versus just $3 million in 2018. Earnings per share rose to 6 cents from 5 cents in 2018 and are expected to exceed the 26 cents per share realised in the fiscal year to March, with IC forecasting 38 cents per share.
According to the managing director’s report, “the positive outturn reflects gains from ongoing improvements in operational efficiencies, reduction in structural costs and streamlining of the operations. Capital improvements for the period totaled $60 million with the main focus during the period being the completion of the powder plant expansion.”
Lasco generated gross cash flow of $348 million for the quarter but paid $250 million in dividends and repaid loans amounting to $106 million. At the end of the period, cash and bank balance stood at $995 million. Long-term loans outstanding amounts to $876 million.

Lasco Manufacturing products.

Loans amounting to $464 million is due to be repaid in the next twelve months. The company seems to be heading into a period of greater maturity, when loans will be repaid from the strong annual cash flows that the company is slated to generate, going forward.
Shareholders equity stands at $5.9 billion and net current assets $2.2 billion, which exceed current liabilities of $1.5 billion.
There has been increased interest in the stock with the recent announcement that the United Cannabis Corporation, the American company that is partnering with Lasco Manufacturing for the production of cannabis-infused water among other cannabis medicinals, has been issued a license to cultivate cannabis through a company called Cannabinoid Research and Development.
The stock traded on the Junior Market of the Jamaica Stock Exchange on Friday at $5.50.

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