Lasco Distributors profit dips in the second quarter
Lasco Distributors Limited, faced with legal fees and a lack of warehouse space, saw a 17 per cent fall-off in earnings in the second quarter.
Profit fell to $205 million in the July-September period.
On a per share basis, earnings dipped from eight cents to six cents in the quarter; but rose from 11 cents to 12 cents over the half-year period.
The company continues to grow due in part to sales of its iCool beverage made by sister company Lasco Manufacturing. Lasco Distributors indicated that new products will come on stream in the coming quarters. Consequently, sales and marketing spend are already increasing to support new and current products.
“The company's pipeline for new products is exciting, robust and imminent and we are planning for rapid expansion in both the local and export market,” said Managing Director Peter Chin.
Revenues over three-months hit $4.2 billion up 16.6 per cent higher year on year. It led to higher gross profit at $742 million compared to $570.7 million a year earlier. Despite these gains the operating expenses jumped to $549.5 million up from $338.4 million a year earlier.
"The increases in operating expenses were due to a one-off legal and consultancy fees and higher than normal operational costs relating to logistics and warehouse capacity issues,” said Chin in a statement accompanying the earnings report.
He said the company recorded higher costs due to the lack of storage capacity. However this issue should be resolved upon the imminent completion of the second phase of the warehouse expansion.
The book value of fixed assets - property plant and equipment - grew by 51 per cent or $398 million to $1.2 billion at September.
“Of this amount $699.9 million relates to our expanded warehouse and logistics infrastructure,” stated Chin.
Total assets at the end of the period stood at $7.3 billion, or 16 per cent more than the same period last year.
Shareholders’ equity at the end of the period, stood at $3.8 billion or 15 per cent more than the prior year, while the return on equity for the six month period was 21 per cent, compared to 26 per cent in the prior year.
Lasco Distributors is a junior company on the stock exchange, which means its issued capital cannot top $500 million in order to maintain its junior status. At September, Lasco Distributor’s share capital was valued at just under $276 million. The majority of its equity related to retained profit totalling $3.37 billion.
Lasco is expecting a big payout from a case it won against giant American drugmaker Pfizer.
The assessment of damages began in the Supreme Court in September 26.
“The proceedings have so far lasted for five days with key witnesses for Lasco being cross-examined,” said Chin.
Court was adjourned on September 30 and the proceedings will reconvene on November 21 for a further five days when Lasco witness, he said. “Thereafter the 1st Defendant and Pfizer will present their cases.”