Peter Chin

Lasco Distributors with responsibility to distribute “I Cool” drink.

Lasco Distributors reported an 87 percent increase in profit after tax for the six months to September, of $379 million over 2014 and a 121 percent increase in the September quarter of $247 million over the similar quarter last year.
The Gross profit for the period was S1.1 billion, an increase of $299 million or 36 percent over the prior year. The Gross Profit margin for the quarter was $628 million, or 32 percent over the same period last year. Gross profit margin for the august 2015 quarter is 17.26 percent versus 17.5 percent in 2014 and year to date 16.2 percent in 2015 and 16.28 percent in 2014.
The huge gain came from increased revenues of 34 percent for the quarter, amounting to $6.95 billion and 36 percent for the six months of $3.64 billion.
“This growth was driven mainly by contributions from our iCool and Unilever lines of business, both of which have been doing very well”, Peter Chin, Managing Director reported to shareholders in the directors’ report accompanying the financial data.
An interesting element of the results is the 10 percent growth in revenue over the June quarter a continuation of the quarter over quarter growth evident from late in 2014 with an average of 8 percent for the last three quarters.
Earnings per stock for the six months amount to 11 cents and 7 cents for the quarter. IC Insider projects profit of 34 cents for the current year and 50 cents for the year to March 2017.
Cost were held well below the growth in revenues with Operating Expenses in the latest quarter rising to $396 million from $377 in 2014 and for the six months this year the company incurred $779 million versus $658 million in 2014 for a rise of 18 percent.
Cash flow from operations increased by 94 percent to $391 million from $202 million for the similar period to September 2014 swelling Cash and Equivalents at the end of the Period to $904,043 compared with $191,277.
The company’s shares are listed on the junior market of the Jamaica Stock Exchange. Its principal activity is the distribution of pharmaceutical and consumable items, ii distributes all of Lasco Manufacturing’s products locally.
The stock may be considered fully priced currently with a PE of 10 being one of the higher priced junior market stocks, but with strong growth expected and lower interest rates to come, investors with a long term time horizon may want to accumulate from now, bearing in mind the limited supply available.

Lasco Distributors disappoints, major expansion coming

Lasco Distributors reported disappointing results for the first quarter, for the 2015 financial year to June, with revenues crawling up 4 percent to $2.4 billion and profit dropping 45 percent to $91 million from $164 million in 2013.
Lascelles Chin Chairman of the company however, indicated to IC Insider that the company will be embarking on a major expansion which will include increased warehouse space to accommodate distribution of new products. Chin indicated that “the funds from winning the legal case against Pfizer Limited, will play an important role in funding the expansion”. The proceeds is expected to exceed well over J$1 billion. Already “Lasco have acquired a warehouse at a reduced price to what it originally cost to be assembled in Jamaica” Chin Indicated.
This June quarter performance is after the company took on the Salada Foods distribution. Margins on goods sold declined badly to 22.67 percent from 25 percent, while operating cost climbed by 20 percent from $302 million to $361 million. Earnings per share came in at 0.27 cents versus 0.49 cents in 2013.
“We planned for increased staff strength and marketing activities in preparation for pending new product rollouts. The current business environment with a devaluing dollar impacts the trade as there are continuous increases in prices and lower consumer spending power. The company continues to deploy measures to mitigate effects of the volatile market conditions and at the same time maintain its market positioning to provide overall value for consumers.
We continue to build our core portfolio and have several new products in the pipeline to ensure long term growth and profitability,” Peter M. Chin, Managing Director reported to shareholders.
Chin went on to state “total assets grew by 30 percent to $4.288 billion compared to $3.308 billion in the corresponding period last year. Property, plant and equipment grew by 59.7 percent to $313 million. This is primarily due to increased capacity and improvements in work flow processes in the distribution centres in preparation for new product launches.
Inventories increased by $331 million to $1.31 billion and this is mainly due additional inventory from new business agreements. Short Term Deposits increased by $80 million to $552 million and Cash and Bank Balances decreased to $285 million from $496 million. Trade and Other Receivables was at $1.598 billion, an increase of $400 million over the prior year. We continued with the arrangements to extend credit terms to our key institutions. There was also a related increase in Trade and Other Payables, an increase of $570 million to $1.76 billion.”
The company may have had a bad quarter but with plans for expansion and new products to be launched investors may want to be taking a look at the stock now that it’s been hit down to a low level with a view of benefitting when the profits rebound with additional sales to come from new products.