The latest quarterly report to December 2013, shows that Lasco Finance Services pumped in funds to nearly double its promotional cost to push for a greater share of the remittance business, resulting in heightened marketing and selling cost from $111 in 2012 million to $204 million in 2013.

In the December quarter the cost was pushed to $87 million compared to just $36 million in 2012. The increase spend in this area kept profits down to $46 million versus $55 million in the December 2012 quarter and for the nine months period $136 million or 20.6 percent above the 2012 results for the similar period. Administrative cost rose by a strong 26 percent for the year to September but by the end of 2013, the rate of increase fell to 22 percent as the December quarter increased by only 15 percent to reach $47.5 million and for the nine months $144 million versus $118 million.

With the reduced spend on promotion that should flow with the completion of the World Cup promo, profit should end the year around $220 million and that would be up from $164 million in 2013 or earnings of 18 cents per share.

“In pursuit of our strategic objective to increase our market share in the remittance industry, towards the end of the 2nd Quarter, we launched our Brazil 2014 promotion which lasted until December 31, 2013. This investment contributed to the more than 100% increase in selling and promotional expenses. We anticipate that the resulting rise in transactions from this awareness campaign will continue into the future periods,” management stated in release accompanying the results.

As the promotion ended, the March quarter figures should reflect much lower cost in this area and with that increased profit. Trading income in the quarter rose by a strong 42 percent to reach $176 million and for the nine months period the growth was 42.6 percent taking it to $469 million.

The financials remain strong with equity of $610 million, liabilities of only $95 million and cash of $302 million.

Lasco Financial is an IC Insider Buy Rated Stock. To view the full list, click here.

Related posts | Buy Rated stocks coming in | Lasco Financial profit rise

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.

Related posts | Lasco Distributors, more room to profit | Carib Cement & AMG now Buy Rated

Profit at Lasco Financial climbed faster in the September quarter than in the June quarter reaching $50 million, well ahead of the $31 million earned in 2012 by 64 percent and the $39 million earned in the first quarter of this fiscal year. For the year to date, profit is up to $90 million from $57 million in 2012 by 57 percent. The strong improvement in the bottom line flows from revenues that increased by 46 percent to $303 million for the six months to September over 2012, and 43 percent in the September quarter to $159 million.

The company keeps on totting up the quarterly profits as volume of business keeps on growing with some help from the slippage in value of the Jamaican dollar. Robust growth in profit was recorded in the last fiscal year to March of $164 million compared to $102 million, a 60 percent increase. The strong gain in profit achieved in 2012, up by 244 percent, was helped partially by a revaluation surplus on investment property that was booked in 2011.

Growth in 2013 is helped by the acquisition of cambio and money transfer business from Supreme Ventures. As the company grows in size, the growth rate has slowed but the results to date indicate are that the level seen last fiscal year should continue for the current fiscal year.

Expenses up | Expenses have grown steeply with selling and marketing ahead of revenues with a 55 percent increase for the quarter and 57 percent for the six months. Administrative costs are up, well below revenue growth with the September quarter up 19 percent and year to date 26 percent.

The company is now in the major period for earnings when remittances rise ahead of the Christmas season, which is expected to push profit well above what has been earned in any of the two quarters so far.

“The increase in income is a result of the growth in the remittance business due to additions of key partners and ongoing promotions,” management stated in their release to shareholders.

IC Insiders forecast is for earnings to be around $250 million or 20 cents per share for the full year.

Marketing | Management indicated when they released the June quarter figures “that Lasco Financial has commenced significant investments in marketing activities, which are expected to capture even more substantial market share for our remittance division; the outcome of which will also yield growth opportunities in the Currency Trading division. This is noticeable in our selling and promotion expenses which saw a 58 percent increase, up from $36.3 Million in the previous period to $57.6M. Administrative and other expenses rose in the quarter to $47.6 million up 33.7 percent over the same period of 2012.”

The company’s subsidiary Lasco Financial Services (Barbados) Limited and its agent Unicomer Barbados Limited (Courts) began trading in May 2013.  Lasco indicates that this business is now at a breakeven level.

Growth | Total assets amounted to just $47 million in 2010 but has enjoyed rapid growth and is at $661 million at the end of September this year, still a small financial company in the local market with room to grow. Loans advanced was nil at the end of 2011 and is now close to $100 million at the end of March this year and is expected to grow at about 30 percent for the year. Loans and receivables rose to $335 million at the end of June up from $237 million at the end of June last year, is down to $261 million at September. Cash also increased and is now at $282 million compared to $136 million at the same period in 2012. Equity stood at $564 million and is expected to increase as profits roll in.

Lasco Financial is an IC Insider Buy Rated stock.

Related posts | LASCO Financial small but tallawah | Buy Rated bargains

Profit rose 15.5 percent for Lasco Manufacturing in the September quarter over the similar period of 2012 to reach $176.4 million versus $152.7 million. This reflects an improvement over the results in the first quarter, which when combined with the second quarter results, amounted to $315.2 million compared to $306.3 million for the same period last year, an increase of $8.9 million or 2.9  percent. The company had taken a $40 million hit in custom duties for spoilt raw material in the first quarter that occurred during the 2013 fiscal year.

The improved profit for the latest quarter came about primarily due to a rise in revenue, from $958 million in 2012 to $1.03 billion in 2013, an increase of 10.75 percent and far stronger than the year-to-date performance of 4.6 percent increase to $1.88 billion up from $1.79 billion to September last year. Gross profit for the six months rose from $502.4 million to $526.2 million, an increase of $23.8 million or 4.7 percent. For the quarter to date, gross profit rose margin declined a bit as evidenced by the by slower growth in gross profit of $18.5 million or 7.2 percent, which is below the growth in revenues. “The company was able to mitigate the effects of foreign exchange volatility by making early payments to foreign suppliers” management stated in their release with the results.

Operating expenses for the six months to September 2013 rose by a mere 2.2 percent or $4.5 million over the prior year’s $200 million to move to $205 million in 2013. For the quarter, operating expenses was just $97 million, a reduction compared to $108 million in prior year.

Improved cash management has resulted in a reduction in the finance cost of $7.2 million over prior year’s $13.8 million in 2012, compared to $6.7 million in 2013.

The new factory is expected to come into production during this month starting with liquid products of water and juices. The powder products factory will come into operation in 2014. The company was allowed to add interest on it $1 billion plus loan to the cost of the plant but once it’s in operation, interest and depreciation will be expensed and this could have a drag on profits for awhile until sales from the new plant can cover fixed cost.

Financial position | The company increased amounts tied up in inventories sharply to $664 million up from $283 million last year September and $490 million in March as trade and other receivables grew to $881 million from $710 in September last year and $629 in March this year. Trade and Other Payables have also gone up with the amount standing at $699 million from $481 last year and just $259 in March. Long Term Debt used in the expansion is now $1.37 billion versus $350,000 in 2012 and $804 million in March. The rate on the loan is under 9 percent.

The future | The real excitement about Lasco Manufacturing is the major expansion of the factory operations and the relocation of some of its activities that should reduce cost while expanding the products to be produced. This should translate into strong revenues and profits going forward, more likely in the next fiscal year which starts in April next year.

IC Insider is projecting earnings of 17 cents per share for the year ending in March 2014 and 30 cents for the following year with the new factory in full operation.

Lasco Manufacturing is an IC Insider Buy Rated Stock.

Related posts | LASCO Manufacturing profits in the future | Buy Rated: TTSE stocks climbing, JSE falters

Lasco Distributors reported an 11 percent drop in pretax profits in the 12 months ended March this year even as sales climbed 10.6 percent for the same period. The March quarter revenues only grew by one percent, pulling down what was a more robust increase up to the December quarter. But things seem to be back on track in the June quarter as revenues are up 15 percent to $2.31 billion, an increase of $303 million over the corresponding period last year and profit is up to $164.2 million, an increase of 21 percent or $28.5 million over the same period in 2012. Earnings per stock improved from 4 cents in June 2012 to 4.9 cents in June 2013 quarter based on the new amount of shares issued.

LASCO Distributors continues to introduce new brands to market. Most recently, Baby Yum Infant Cereal and Breathezy, a generic alternative for Asthma Management, were launched.

Operating Expenses to Sales ratio was 13.1 percent compared to 14.1 percent, a significant improvement over the corresponding period last year.

“Revenue and profit performance was due to the increased volumes, aggressive marketing activities and improvement in efficiencies,” the company’s Chairman Lascelles Chin stated recently. He went on to say that “It is commendable that even with increased marketing activities and the introduction of new products each year, the company was still able to contain operating expenses. LASCO Distributors continues to do very well and will expand its range with exciting products and grow its revenues with brands from pharmaceutical principals, as well as our own LASCO brands.  This will be bolstered in particular from the new products to come from the LASCO Manufacturing expansion.”

The company is looking good going forward, especially after September when the Lasco Manufacturing factory expansion is completed and starts production of new products which will be marketed by the distribution company. IC Insider is forecasting that sales will pick up in the second half of the company’s year and earnings increase to $840 million or 25 cents per share for the year ending March 2014.

The company was able to reduce inventories from $1.28 billion at the end of March to $967 million, as such cash and investments increased from $507 million to $817 million over the same period. Current assets exceed current liabilities by $1.69 million at the end of June. There is virtually no debt financing at the end of the quarter and the equity is at a little over a $2 billion.

Insider call | Lasco Distributors is an IC Insider Buy Rated stock.

Related posts | All 3 Lasco companies approve splits | LASCO Distributors lowers profit