Lascelles Demarcado will spend over $1.6 billion on capital projects next year in a bid to support its wines and distribution business.

Most of the money will be spent on a high-tech warehouse that will boost productivity and inventory capacity. These investments are a big deal for the conglomerate, which is growing its product line. It only spent $268 million on capital projects in 2007.

"Of the total, approximately $1 billion relates to a new state of the art warehouse facility for Lascelles Limited," said Janene Shaw, group financial officer in an email correspondence with the Business Observer. "The growth of the General Merchandise business and the Wines & Spirits business in Lascelles Limited, has resulted in the need for additional space."

The limited space was, in part, due to the company acquiring the distributorship of Kimberly Clark products, which has brands like Huggies and Kleenex.

The conglomerate expects that the capital expenditure will further increase the group's profitability next year. It posted $3 billion in net profit which was 12.7 per cent more than last year. Almost half of its earning came from the Investment division which made $1.49 billion. Its other divisions posted higher profits expect for a division called Liquor, rums, wines and sugar, which made $1 billion versus $1.6 billion the previous year. The decline was not because people were drinking less spirits, but due to the hurricane damage, said Shaw.

"The Liquors, Rums, Wines and Sugar Segment experienced a reduction in profits of $554 million or 34 per cent. Although the "Spirits" division experienced growth, the "Sugar" division returned a significant loss. Bad weather conditions which commenced with Hurricane Dean in August 2007 led to a reduction in the cane quantity and deterioration in the cane quality," she added. "This therefore resulted in a decrease in sugar production. In addition, increased usage of fuel at higher costs affected production costs adversely. The agricultural division took another "blow" due to the passage of Tropical Storm Gustav in August 2008. Because of the damage experienced, a reduction in the cane quantity is expected and consequently over $200m of amounts upheld for future crop expenses were spent in the 2008 financial. All these factors contributed to the significant loss returned from the Agricultural Operations. The growth experienced by the "Spirits" division was insufficient to cover the growth in losses experienced by the "Sugar" division."

The fear factor

Feeding the multitude

DANGEROUS PETS