Business

Things looking up for Lasco in 3rd quarter

Wednesday, November 01, 2017

Print this page Email A Friend!


Things are looking up now for the Lascelles Chin-led Lasco Affiliated Companies in the third quarter of 2017/18, after what the company publicly admits was an unusually ordinary 2016/17.

“Indeed there were challenges last year,” stated Chin, Lasco's executive chairman, in the company's 2017 annual report and repeated at last Wednesday's Mayberry Investmensts monthly investors forum, at the Knutsford Court Hotel in New Kingston.

For example, although Lasco Distributors Ltd grew its revenues last year by 8.6 per cent to $15.8 billion over 2016, net profit fell by almost 15 per cent to $609.7 million compared with the previous year's figures.

According to Chin, “net profit performance was impacted by logistic issues, one-off expenses due to legal and construction costs and marketing investments, which are some of the effects of rapid growth”.

However, he said, “the charge is to consolidate, focus on key objectives and look to build on the foundation that has already been established”.

Within another 72 hours, Lasco will also be sharing in what is expected to be a huge windfall from the settlement of its Supreme Court issue with multinational drug giant Pfizer. All that is left in this matter is for Supreme Court judge Justice Viviene Harris to name the figure on Friday.

All the legal challenges have been resolved, and now Justice Harris will complete the process by fulfilling the Privy Council's ruling that the local Supreme Court should decide the damages owed by Pfizer to the two local firms for preventing them from selling their amlodipine besylate-based generics in competition with Pfizer's branded Norvasc between 2005 and 2012.

Lasco is seeking from the court a total of US$490.1 million, including US$179.1 million in interest. Medimpex has been seeking US$11.5 million. Approximately US$62 million, or J$7.25 billion, would end up in the government's coffers as tax revenue as well, if the local companies' compensation claims are met.

Chin informed the Mayberry investors' forum that the payment of damages would not only benefit Lasco Distributors' shareholders, but also affiliated companies - Lasco Manufacturing and Lasco Financial.

The executive chairman was upbeat that Lasco Distributors will rebound from what he described at the forum as a “little dip” in 2016/17.

Commenting on the 14.9 per cent fall-off, managing director of Lasco Distributors, Peter Chin, noted that while the firm's top line grew positively, profit performance was affected by a number of one-off expenses.

He said that these expenses included new products introduced, logistic costs associated with the expansion of the Whitemarl expansion, and professional fees relating to the Pfizer case.

Chin stated in the annual report that, to date, the company had spent $725 million in upgrading its warehouse at Whitemarl, St Catherine. He is confident that the new facility will enable greater efficiencies in logistics and energy usage.

He said that during the year, the company invested more than $100 million in upgrading its core business software, and implementing its business intelligence platform.

“The core software upgrade will be completed in the coming year, and will seamlessly and efficiently integrate the front and back office operations. All of these investments form the foundation needed to drive future sustainable growth,” he insisted.

Group boss Lascelles Chin was even more optimistic about the future of Lasco Manufacturing, which also had a financial dip last year.

The company increased annual sales by $400 million to $6.9 billion for the year ending March, 2017. But its bottom line shrank 18 per cent to $707 million, in a reversal of its profit growth trajectory.

He was convinced that pulling former Nestlé Jamaica boss James Rawle, out of retirement and making him a director of Lasco and managing director of Lasco Manufacturing Ltd would greatly enhance its capacity for growth.

He said that he was very confident that, although Lasco Manufacturing also had a “little dip” in share price last year, Rawle will make a tremendous success of the recovery.

“The story is that I had to convince him to come out of retirement because I felt that… a man with such experience not giving the benefit not only to Lasco Manufacturing, but also to Jamaica, would be a waste,” he stated.

“I am very happy that he has taken it very seriously…so we can expect some very good results. Those of you who have invested in Lasco Manufacturing, look out for the future,” Chin added.

Rawle said that he was shocked when he went to Lasco and saw the quality equipment available to the production staff.

“When I got on the inside, I was shocked. What the chairman said was true. I said to him, 'Where did you get all this money to invest in all this state-of-the-art equipment?' Normally, that is done over five years or so, but he (Lascelles Chin) is a man in a hurry, so he did it in a year, and that's excellent,” Rawle said.

— Balford Henry

ADVERTISEMENT




POST A COMMENT

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT

Poll

ADVERTISEMENT
ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT