Ashford W. Meikle, Staff Reporter
Lascelles deMercado's head office on Dominica Drive in New Kingston. - file
Driven by significant improvement in its agri-culture operations as a result of fair weather conditions, conglomerate Lascelles DeMercado and Company is reporting a 13 per cent increase in revenue and a 21 per cent jump in net profit for the nine months ended June 30, 2006.
The group, which includes liquormaker Wray and Nephew, recorded net earnings of $1.6 billion on gross revenue of $16.5 billion.
"The liquors and rum segment has improved over last year because the results of the agriculture division has improved, so profits are back up to normal levels. If you recall, the year before last, we had Hurricane Ivan," Lascelles' chief financial officer, Jenene Shaw, told Wednesday Business.
It's a point that at least one industry analyst agrees with.
"The 2006 nine months performance was augmented not only by better revenue generation out of all the segments - save for investments - but by the significant improvements in the strongest segment, the liquors, rums, wines and sugar segment," said Kiesa Ansine, senior researcher at Jamaica Money Market Brokers.
"Agriculture has had a more favourable quarter over last year because the weather was not as adverse."
Revenue from the conglo-merate's liquors and rums segment - which contributed 60 per cent to its overall revenue - went up by 15 per cent, to $9.8 billion.
Concerns
Still, Shaw acknowledged that while the agriculture division has performed well, it is not necessarily on track for a smooth ride. "That section continues to be challenging," she said. "There are a lot of issues going forward, particularly with molasses and ethanol."
Shaw's concern stems from the fact that there is competing demand for molasses, which is used by distilleries, but is also raw material for ethanol production.
The CFO says that there is some insulation for the company since it sources imported molasses from Caribbean Molasses, which supplies all the distilleries in the island.
"We are definitely not looking to go into ethanol production, because rum is our business," Shaw said emphatically.
She told Wednesday Business that the company is also looking to effect major changes in its troubled automotive division, which lost the BMW dealership to Stewart's Auto Sales earlier this year.
Transformation
"The auto division is being transformed. It's still a work in progress in its infancy stage," she said, while declining to go into details. Lascelles, however, still has the franchise for Subaru and Ford and recently added the luxury vehicle, Jaguar, to improve market share in the luxury vehicle sub-sector.
Overall, the transportation segment, into which auto division falls, recorded a 23 per cent increase in revenue, to $1.5 billion, with the return to normalcy of the aircraft and cargo handling business of AJAS after the busy 2004 hurricane season, as well as the buoyancy of the tourism industry. Shaw attributes the 16 per cent increase in revenue of Lascelles' general insurance business to "the complimentary business that came when Lascelles took over Jamaica General Insurance Company." The division posted revenue of $1.9 billion.
Also performing well, was the general merchandise segment, which saw a 17 per cent growth in revenue, to just over $3 billion.
However, revenue from the company's investment business saw a 35 per cent plunge to $569 million, mainly as a result of declining dividend income from Carreras Group, of which Lascelles is the second largest shareholder.
