The Hon. Lascelles Chin
Executive Chairman & Founder
LASCO Affiliated Companies
The LASCO Affiliated Companies put on a solid performance for the year ended March 31, 2016, posting a combined net profit of $1.7 billion.
For the year under review, the companies – LASCO Manufacturing (LML), LASCO Distributors (LDL) and LASCO Financial Services (LFS) posted a 29 per cent increase in profit up from $1.3 billion during the comparative period of 2015.
The biggest performer of the group was LASCO Manufacturing, which posted $826 million in net profit up from $612 million in the comparative year. Revenue increased by 37 per cent, moving from $4.8 billion 2015 to $6.6 billion for the year ended March 2016.
This performance is attributable to the roll out of several products as the capacity of LML’s liquid plant reached its peak following a US$5 million investment in equipment during 2014/2015. LML also spent US$4.5 million on new equipment, which will double production capacity. Additionally, several products are expected to come on stream in this financial year once the increased production capacity is achieved.
Cost of sales also increased, moving from $3.4 billion in 2015 to $4.2 billion for the year under review. LML spent $1.1 billion on administrative and other expenses during the year ended March 2016, up from $555 million in the comparative period last year.
The company continues to perform remarkably well considering the significant increase in expenses due to staff costs, equipment maintenance and interest charges from the expansion. Nonetheless, the Robert Parkins-led company expects to see “exciting profits from both the liquid and powder operations within a year or two.”
At the same time, LASCO Distributors Limited saw a 31 per cent improvement in its net profit for the year ended March 2016, moving from $546.7 million in 2015 to $716.8 million in the year under review. Revenues increased to $14.5 billion, a growth of 31 per cent of $3.4 billion over the prior year. The Gross profit margin of $2.7billion increased by 33 per cent the over prior year, propelled by a strategic drive to increase market share in key categories.
The financial year 2016 was represented the first complete year of operations distributing the Unilever brands, as well as the marketing and sales of the iCool juices, water and flavoured-water products.
Peter Mark Chin, Managing Director of LASCO Distributors Limited noted in his report to shareholders that “it has indeed been another successful year of growth and increased market share for both our core product ranges and newly launched ones.” LDL was appointed by LASCO Manufacturing Limited at the end of the financial year as its exclusive distributor for all export markets. The appointment, which took effect April 1, 2016, provides tremendous opportunities for growth in the export business, as well as expansion of the LASCO brand in current territories as well as new ones.
“Focus for the coming year will be on strengthening our operational capabilities, service delivery and continuing to aggressively push to increase volumes,” Chin said. Moreover, the warehouse expansion project is targeted to be completed in the new financial year, and will further bolster the company’s logistics capabilities. There will also be improvements in internal processes, operational efficiencies and upgrading its technology platform.
Meanwhile, LASCO Financial Services Limited saw an increase of 6 per cent in its net profit for the 12 months ended March 2016, moving from $191 million in 2015 to $203.3 million in the year under review. Revenue improved by 22 per cent up from $713.4 million in 2015 to $870 million in the year ended March 31, 2016.
More was spent on administrative as well as selling and promotional expenses during the review period as a result of significant investments to diversify our business lines. LASCO Financial added a Cambio location in Port Antonio; in September its first business loans branch was launched, closing the year with four locations.
During the financial year, the company made significant investments to diversify its business lines. LFS launched its Telecoms Division with the distribution deal for smartphones and wearable devices. This investment impacted expenses mainly due to a 77% increase in staff complement to roll out the new locations and an aggressive marketing support to launch the telecoms business.
Collective expenses grew by 24.2 per cent over the previous year resulting in a lower profit during some quarters, as the revenue in the early periods were outpaced by the start-up costs, the company led by Jacinth Tracey-Hall said in its statement accompanying the financial results.
“As we plan the year ahead, we will continue to pursue our expansionary activities in our existing as well as new business lines as part of our strategy for growth,” the company said.