Profit blast at LASCO Distributors

Lasco Distributors (LasD) posted profit of $139 million for the quarter to September this year compared to $54 million or an increase of 159 percent over the same period in 2012.

In the six months to September, profit of $303 million was up a strong 60 percent over September 2012, when $189 million was reported. The results flowed from revenues of $4.63 billion, an increase of 13 percent over the $4.1 billion generated in 2012. The quarterly revenue grew by 10 percent to $2.3 billion. The growth is likely to pick up as Lasco Manufacturing, its sister company, starts the role out of new products in November, which will be distributed by LasD.

Gross profit was $457 million compared to $362 million and gross profit margin was 24.5 percent, an improvement over the 20.7 percent in the similar quarter last year. For the six month’s period, gross profit margin was 24.8 percent compared to 23 percent in 2012. “There was an overall improvement in the company’s performance and recovery from the one off adjustment to cost of sales which occurred in the comparative period of 2012.” Management stated in their recent report to shareholders.

“The revenue and profit performance was due to increased volumes, aggressive marketing and trade activities and improvements in efficiencies” management further stated.

Operating cost rose just 5.2 percent for the half year, even less for the quarter at 3.4 percent, and was one reason for the jump in profit.

Outlook | IC Insider is forecasting earnings of 22 cents per share for the current year ending in March and 35 cents for the following year to March 2015. This puts the current PE around 7 times and just over 4 times for 2015. The forecast takes into consideration increased revenues as a result of new products to flow from the manufacturing company. Around 60 percent of the listed companies are valued lower than Lasco Distributors and only 4 junior market companies are valued higher, with 3 of them valued between 8 and 9.5 times this year’s earnings. As such the stock is one for accumulation than for rapid acquisition at this stage.

Asset size | Total assets grew by 29 percent to $3.29 billion in September compared to $2.55 billion in September 2012. The contributory factors were cash funds and investments which increased from $435 million in September 2012 to $1,029 million, Trade and Other Receivables increased from $1.23 billion in the prior year to $1.4 billion in September.

Trade and other payables increased from the prior year by $161 million to $1.49 billion this September. Shareholders’ equity amounted to $2.29 billion and borrowed funds amounted to only $15 million.

Lasco Distributors (LasD) is an IC Insider Buy Rated Stock.