Sales fell marginally to $1 billion from $1.03 billion in the September 2014 quarter, compared to 2013, at Lasco Manufacturing. A sharp jump in operating and finance cost helped to pressure the financial performance in the quarter to a profit of $127 million down from $176 million in 2013.
Earnings per share fell to 3 cents for the quarter and 7 cents for the six months. Year to date revenue was $2.08 billion compared to $1.88 billion for the same period last year, an increase of 11 percent. “This growth was driven mainly by increased volume in our export markets. Our International Division reported a growth of 40 percent during the quarter” management stated in their release with the financials.
Gross profit for the six months rose 14 percent to $602 million from $526 million and in the September quarter it grew to $287 million from $276, bettering gross profit margin moderately. Net profit for the six months declined 15 percent to $268 million against the comparative period last year. “The net profit performance was in line with the expectations of management and the board, this was due to temporary increase in manufacturing cost resulting from the effect of changes in staff complement, overhead costs associated with the new manufacturing plant, and increased finance cost,” the company’s management stated.
Operating expenses climbed 54 percent to $151 million in the latest quarter, and 41 percent, for the six months period. While there is no breakdown for the operating cost, other than the increased staff cost mentioned above, increased depreciation charge on the liquid factory would also be one of the factors pushing cost. With the other factory to be opened after the quarter’s end, the depreciation charge will rise again. Finance cost jumped to $25 million in the quarter from just $2 million in the 2013 quarter and for the half year to $57 million from $2.3 million. Prior to the completion of the factory, the finance cost associated with building and equipping the factories was capitalised as part of the factory cost. With the completion of the facilities, the cost will be a direct charge against income.
During the quarter, the company introduced LASCO iCool water, iCool flavor water and iCool juice drinks to the market. The company made significant investments in marketing as well as promotional activities in collaboration with affiliated company LASCO Distributors.
“The company is on target with its long-term plan to invest in innovation across all facets of the business – from new product development to powering a pipeline of new products, drive financial performance and fuel continued consumer passion for the LASCO brand,” management stated.
Finances| At the end September, borrowed funds was at $1.49 billion with $187 million to be paid within the next twelve months, while cash funds were at $153 million. $2.1 billion is in work in progress to be transferred to fixed assets and will push total fixed assets to $3 billion when effected. The company is also in the process of constructing a new warehouse of 30,000 square foot. Up to the end of the September the company was operating from two factories one at the White Mall facilities as well as at Red Hills Road, thus resulting in duplicated cost. The liquid plant is to be up graded further by $3 million to reduce raw material cost and expanded for other products, including production for some foreign partner.