Sales up margin down at Lasco Distributors

October 31, 2014 by

Peter Chin - Lasco Distributors' Managing Director

Peter Chin – Lasco Distributors’ Managing Director

Sales climb 17 percent for the September quarter, at Lasco Distributors to hit $2.7 billion and 10 percent in the six months to September, to reach $5.1 billion. Gross profit margin declined, leading to a growth of just 3.8 percent in gross profit, to $475 million from $457 million, for the quarter, and declined 2.2 percent to $910 million for the half year.
Operating cost jumped 15 percent in the quarter, to $377 million and just over 17 percent for the six months to $738 million, pushing profit down 19 percent to $112.5 million for the quarter, from $138.7 million in 2013 and down a much larger, 33 percent, to $203 million for the half year, versus $303 million in the 2013 period.
As disappointing as the second quarter numbers are, they represent a major improvement over the first quarter with a revenue increase of 4 percent, and a fall in profits of 45 percent compared to the 2013 June quarter.
Finances|The company has quite a bit of funds tied up in inventories $1.3 billion and receivables $1.7 billion, that are in excess of normal trading levels, cash funds on the other hand is up to $850 million and will be handy in helping to finance the 110,000 square foot warehousing facility, that they will be embarking on shortly, to meet what management says, is increasing demand flowing from new products to be distributed by the company.
The expected payment from their successful law suit against Pfizer is not yet booked and the amount not yet made public but should exceed $1 billion.
Lasco Manufacturing new "I Cool" drinks

Lasco Manufacturing new “I Cool” drinks

Lasco Distributors markets a wide range of household, foods and pharmaceutical products and is listed on the junior market of the Jamaica Stock Exchange. the company recently started the distribution of I Cool barnds of drinks its sister company Lasco Manufacturing commenced manufacturing recently, as well as Salada Foods products which it commenced distributing, at the start of the year.

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Lasco Distributors disappoints, major expansion coming

August 5, 2014 by

LASCOPharma_logo150x150Lasco 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.

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Lasco Distributors prevails against Pfizer

July 3, 2014 by

Lasco Distributors has prevails against Pfizer in a law suit that Pfizer brought against Lasco. The local company had won the case in the local courts but Pfizer appealed the judgement to the Privy Council in 2012.

Lasco Distributors has now advised, that the Privy Council has dismissed the Appeal by Pfizer Limited and has affirmed the decision of the Court of Appeal.
“Lasco Distributors Limited’s (LDL) objection to grant Pfizer Limited a stay of the judgment of the Court was accepted by the Court of Appeal. This means that LDL is permitted to continue to trade in the product Las Amlodipine which it had been barred from distributing and to proceed to have the Supreme Court assess the damages caused by the issue of the injunction and to tax the cost payable by Pfizer,” the company reported in 2012.
Lasco ceased selling Las Amlodipine by an injunction granted in March, 2005, however, Lasco contended that under the provisions of the Patent Act of Jamaica, the Jamaican Patent was not in force when the Company started to market its own product, Las Amlodipine since an earlier patent No. 18266 granted to Pfizer in Egypt had expired in March 1997.
The matter was heard in the courts which found that the case for Pfizer for an infringement of Jamaican Patent No. 3247 failed. The court gave judgment for the Company with costs to be agreed or taxed and directed that there should be an enquiry as to damages suffered by the Company as a result of the interlocutory injunction granted to Pfizer under their undertaking in damages.
It is the expectation of the Company, based on legal advice it has received, that its lost sales of the product to date (estimated to be $400 million) are likely to be recovered in the event that it succeeds in this matter but it is difficult to quantify the amount of damages that could potentially be awarded to the Company as they will continue to accrue until the matter is decided. With the passage of time, the cost of money in Jamaica since 2005, lost sales from 2005 until they were permitted to start selling in 2012 and legal cost involved in the case Lasco distributors should end up with well over $1 billion from the case.

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