Lasco says price hikes are coming, but promises to be gentle
Lasco, which trades in food items and other consumer goods, says consumers should brace for price increases over the coming months, but like one of its largest competitors, Grace Foods, adds that it’s trying to keep price hikes at a minimum by...
Lasco, which trades in food items and other consumer goods, says consumers should brace for price increases over the coming months, but like one of its largest competitors, Grace Foods, adds that it’s trying to keep price hikes at a minimum by managing its own costs.
Lasco, whose brands include iCool beverages and Lasco Lasoy powdered drink mixes, did not state the level of increases under consideration.
One initiative includes revising its energy mix to include solar – a project that is meant to provide around 30 per cent of the power supplies utilised by Lasco Manufacturing Limited and 33 per cent for its affiliate, Lasco Distributors Limited, but the 500-kilowatt photovoltaic system is not expected to be commissioned until December.
For more immediate impact, deputy chairman for Lasco Distributors and Lasco Manufacturing, James Rawle, told the Financial Gleaner that the companies have been making adjustments to production processes and operations to keep prices to consumers low, but he also noted that they can’t continue to absorb the increases, in reference to higher raw material and shipping costs that has hit all businesses under the pandemic.
“We have seen some dramatic increases in prices over the past months. So far, we’ve been absorbing as much as we can but it’s inevitable that prices are going to go up in the very near future because we can’t sustain it for much longer,” Rawle said.
“This is not a Lasco business. Manufacturers across the world are feeling the effects and we are not sure if the prices will come down,” he said.
Still, the two companies have beaten the pandemic, so far, with higher revenue and profit at year ending March 2021.
Lasco Distributors grew earnings by 25 per cent to $909 million on a four per cent jump in revenues to $20 billion. Lasco Manufacturing recorded a profit of $1.4 billion, up 41 per cent, on revenue of $8.2 billion.
Expenses of both operations dipped by 13 per cent and 21 per cent, respectively.
“In business, it’s always about how to get top-line growth, which we had in the companies in a difficult year,” said Rawle. But he noted that certain product categories really suffered. “We had to contain and allocate costs properly to have reasonable return,” he added.
Since the outbreak of COVID-19 in Jamaica, and the restrictions on movement to contain the disease, Lasco has seen a decline in sales for products that fall under the category ‘out-of-home consumption’ or ‘on-the-go consumption’.
Rawle, however, notes that in recent weeks, there has been “somewhat of an uptick” in the out-of-home product segment, which the company has taken as an optimistic sign that business has begun the journey back to normality.