LASM reports a 73% increase in third quarter net profits

Date: February 9, 2018

Lasco Manufacturing Limited (LASM), for the nine months ended December 31, 2017 reported total revenue decreased by 3% from $5.42 billion in 2016 to $5.28 billion in 2017. Revenue increased $316.65 million or 22% to a total of $1.78 billion in the third quarter, relative to the $1.46 billion recorded for the comparable period in 2016.

Cost of sales amounted to $3.61 billion (2016: $3.59 billion) for the period, an increase of 1% year on year. For the third quarter, cost of sales was recorded at $1.22 billion in 2017 relative to 960,842 million in 2016.  As a result, gross profit of $1.66 billion was recorded for the period, 9% less than the $1.83 billion booked for the corresponding period in 2016. Gross profit for the third quarter increased by 12% to $561.12 million when compared to the $503.05 million booked for the quarter ended December 3, 2016.

LASM posted other income of  $14.76 million relative to $18.68 million for the prior year.

Operating expenses increased 5% to close the period at $970.31 million versus $920.35 million booked for the corresponding period last year.  Expenses for the quarter reflected a decline of 10% to close at $300.61 million (2016: $335.20 million). The company stated that the reduction in operating expenses during the quarter “reflected the effects of improved controls”.

Consequently, LASM recorded operating profits of $707.85 million, 23% lower than the $924.97 million booked in 2016.

Finance costs for the period fell 22% to $99.26 million compared to $126.48 million in the prior year’s comparable period.

As such, profit before taxation amounted to $608.59 million, a decrease of 24% from the $798.49 million recorded for the previous corresponding period. Taxes recorded for the period amounted to $76.07 million compared to $98.24 million incurred for the corresponding period in 2016. For the third quarter, profit before tax increased $93.84 million or 73% to $223.19 million. As such Total Comprehensive Income for the first nine months totaled $532.52 million compared to $700.25 million in 2016, a contraction of 24%. Total Comprehensive Income for the quarter totaled $195.29 million (2016: $113.18 million).

Consequently, earnings per share (EPS)  for the period amounted to $0.13 relative to $0.17 in 2016. The EPS for the quarter amounted to $0.05 relative to $0.03 reported for 2016. The twelve months trailing EPS amounts to $0.13. The number of shares used in the calculations amounted to 4,087,130,170 units.

According to LASM, “revenue and profits were impacted by a number of factors including the phasing down of production in the first two months (April – May), additional marketing and branding building investments to support the brands and distribution discounts to support sales.” The phasing down process allowed for plant upgrades to facilitate sustained improvements in output, cost efficiencies, and quality.  The company also noted that “the expected improvements have materialized and it is anticipated that this should continue.”

LASM also introduced a new juice drink “Guava Juice” adding to their existing portfolio and will launch a variety of carbonated beverages and an energy drink in the upcoming quarter.

Balance sheet at a Glance:

Total assets increased 8% year on year, totaling $8.05 billion (2016: $7.48 billion) as at December 31, 2017. The increase in total assets over the period was mainly due to a $334.89 million increase in ‘property, plant & equipment’ to a total of $4.12 billion (2016: $3.78 million) and a $328.31 million increase in ‘trade and other receivables’ to $2.26 billion (2016: $1.93 billion).

Total shareholder equity amounted to $4.84 billion as at December 31, 2017 (2016: $4.43 billion). Consequently, book value per share amounted to $1.18 relative to $1.08 in 2016.

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