LASCO Manufacturing has tacked on another US$2 million to expansion plans it hopes to complete by next April. At the same time, the manufacturer and its two sister companies listed on the Junior Market of the JSE posted a more-than-doubling of combined net profit for its first financial quarter of 2011.

In a letter to Jamaica Stock Exchange (JSE) general manager, Marlene Street-Forrest, Lasco Manufacturing’s managing director Eileen Chin advised that the company would be “embarking on a manufacturing expansion plan which will require investment of US$13 million ($1.12 billion)”.

In June, Lascelles Chin, chairman of the Lasco-affiliated companies, Lasco Manufacturing (LASM), Lasco Distribution (LASD) and Lasco Financial (LASF) said management had calculated the investment at US$11 million ($935 million), which would form part of a three-phase expansion project.

“The expansion will not only see an increase in productivity and efficiency, but also the addition of new products, ten product lines with over 30 SKUs (stock keeping units) and this is only the first of three phases of expansion,” he said while speaking at a forum hosted by Mayberry Investments Limited.

He said the firm hopes to complete the first phase of the expansion by April 2012.

Eileen said that the expected payback period for the project was estimated at four years and that the manufacturing expansion will focus on the relocation and upgrading of the beverage facility; which will allow diversification of its product portfolio.

“The plan entails the relocation, modernisation and expansion of the manufacturing facility to the 25 acres of land at our existing White Marl property, relocation of the bonded warehouse and grouping of raw material warehouses. This will imply building construction and acquisition of new machinery for plant modernisation,” she added. “The additional building capacity will be of around 100,000 square feet.

“The proposed plan will allow Lasco Manufacturing Limited to increase production capacity; and continue improving workflow and efficiency while reducing operational costs. It is anticipated, that once the expansion is completed, the company will be able to continuously increase year-on- year profitability by capturing new market segments through expansion of the product portfolio and the building of the brand.”

For the three months to June 30, 2011, the three firms (listed separately on the Junior Market) posted combined net profit of $292.4 million, which was $167.7 million, or 134.5 per cent higher than the comparative period last year.

On its own, Lasco Manufacturing recorded a 91.6 per cent year-on-year increase in net profit, from $78.8 million to $150.9 million, derived from a 23.6 per cent rise in revenue from $634.7 million to $784.5 million.

“Our improved results demonstrate the positive operating momentum being created through the successful execution of our performance improvement plan,” said Eileen of the improved performance.

Lasco Distributors’ revenue grew year-on-year by 9.9 per cent to $1.7 billion, while its net profit increased from $39 million to $130.4 million.

Lasco Distributors’ managing director, Peter Chin, said the management team and staff remained focused on increasing efficiencies, product innovation and service delivery “in the midst of increased competitive activity and current economic environment”.

“With this resolve and strategic direction we are moving to increase our market presence,” he added.

Lasco Financial Services posted $10.9 million net profit for the review period compared to $6.9 million a year earlier due to “positive contributions from all divisions of the business together with strict monitoring of finance costs led to the improved position,” according to its managing director, Jacinth Hall-Tracy.

“Increased contribution to revenues from Cambio, Loans and Property Rental yielded an overall increase to $58.9 million compared to the previous year’s $54.3 million,” Hall-Tracy added. “Remittance income, however, though still robust, showed a small year-over-year increase. This is a direct result of the impact of the suspensions and restrictions of service of a number of MoneyGram Agents in the Montego Bay area.”

She added that ongoing plans for growth include:

* imminent expansion of our Cambio Network and continued expansion of the remittance network;

* other value-added products, having just launched our main branch as a Prepaid Mastercard distributor;

* renewed growth for Remittance as new controls have been implemented in the MoneyGram network to control the challenges and reclaim market presence; and

* increased revenue streams from loans, having recently added Motor Vehicle Loans and Education Loans to our suite of loans.