Kingston, Jamaica: LASCO Affiliated Companies continued to post positive net profits during the three months ended June 30, 2016, posting a combined net profit of $457.2 million during the period.
LASCO Distributors (LDL) and LASCO Financial Services (LFSL) saw an increase of 33 per cent and seven per cent respectively, while LASCO Manufacturing (LML) saw a marginal reduction of nine per cent during the review period.
Top performer, LASCO Distributors posted $175.4 million in profit during the three months ended June 30, 2016, crediting the performance with continued growth in key product areas of its business.
LDL noted that growth in product categories such as beverages as well as principal brand sales from its pharmaceutical and consumer division contributed to the growth in sales and profit during the review quarter. Revenues for the quarter were $3.9 billion, which was $589.2 million or 18 per cent more than the prior year. Meanwhile, cost of sales increased by 16 per cent under the period under review, moving from $2.7 billion during the three months ended June 30, 2015 to $3.1 billion in the review period this year.
The company incurred an income tax expense of $20.9 million for the quarter, compared to nil in the prior year, due to the partial expiration of its Junior Market tax incentive.
"Management remains committed to containing operating costs, in spite of the challenging economic environment," LDL said in its accompanying statement signed by managing director, Peter Chin.
LDL's total investment in property, plant and equipment at the end of the quarter stood at $1.1 billion, an increase of $346.83 million or 49 per cent from the prior year. Much of this growth was due to expenditure relating to the expansion of the company's 100,000-square-feet expansion of storage space warehouse and logistics infrastructure, which is expected to be completed by December this year.
Meanwhile, LASCO Manufacturing, the production arm, headed by Robert Parkins posted $224 million in the first quarter of 2016, down from $246.6 million the previous year.
Corporation tax is new compared to last year, as the company is now allowed 50 per cent of the original tax waiver on the expiration of five of the original period of 10 years, the company explained in its accompanying statement.
Supply chain issues from its overseas partners, negatively impacted on production and the company's ability to fill demand. Nonetheless, total revenue for the three months was $1.7 billion, an increase of $289 million or 20 per cent over the prior year of $1.4 billion.
With the increase in production capacity and anticipation for the seasonal growth inn volumes there were increased in operating expenses, primarily for equipment maintenance, salaries and new product development. Specifically, operating expenses increased by 45 per cent, moving from $185 million in the first quarter of 2015 to $269.8 million in the period under review.
Finance costs declined by three per cent, down from $42.3 million last year to $41 million during the three months ended June 2016.
The financial arm, LFSL posted $57.7 million in net profit during the first quarter of 2016, up from $54 million in the comparative period last year. It paid out $11.9 million in taxes.
Revenue for its first quarter stood at $260.6 million in, which represents growth of $69M or 36 per cent relative to the corresponding period in 2015.
Income from core business lines increased $62.1 million or 35.4 per cent, whilst other income increased by $6.8 million or 42 per cent more than the previous year.
Growth continues to be driven by our marketing efforts in the Diaspora, resulting in increased remittance transfers and the continuous expansion of the local remittance agent network, Managing Director Jacinth Hall-Tracey noted in the accompanying statement of the financial results.
The cambio business also experienced growth in transactions as well as margins and the loans division continues to benefit from the expansion of the business loans unit.
Total expenses for the first quarter increased by 38 per cent to $190.7M; This is primarily due to a 51 per cent increase in administrative expenses and 27.5 per cent increase in selling and promotion expenses, when compared with the 2015 corresponding period.
The net increase in expense is reflecting the expansion of LFSL's business lines, all of which were implemented in the last two quarters of the previous financial year. Staff costs, software support and marketing programmes contributed to the higher cost of operations.