Lasco Distributors Limited (LASD) has financed its Red Hills Road expansion plans with a $381.5-million loan secured from FirstCaribbean International Bank, its latest financials have revealed.

The company, which has been steadily expanding its presence in pharmaceuticals, has used the funds to bolster its storage and distribution capabilities at the Kingston-based location through the acquisition of a neighbouring property. The move is aimed at enhancing Lasco’s logistics infrastructure, allowing it to keep pace with growing demand in the pharmaceutical sector.

The newly disclosed loan adds to LASD’s liabilities, with $15.5 million due within the next year and the remaining $358 million classified as long-term debt. With an interest rate of 8.25 per cent and a maturity date extending to 2034, the financing introduces a new debt-servicing obligation that will require steady cash flow management.

Despite this, LASD’s balance sheet remains strong, with its cash reserves rising to $3.8 billion, suggesting that the company retains sufficient liquidity to meet its debt obligations. Additionally, total assets climbed 14.3 per cent to $17.0 billion, largely reflecting the acquisition.

While the company is increasing leverage, its latest quarterly earnings reflect the challenges of balancing growth with rising costs.

For the December quarter, revenue climbed 5.7 per cent to $7.73 billion, driven by continued strong demand across its product lines. However, operating profit fell 15.4 per cent to $431 million, while net profit declined 18.5 per cent to $330 million, impacted by lower commission income, foreign exchange losses, and higher operating expenses.

LASD’s management acknowledged these pressures but pointed to ongoing efforts to contain costs.

“We remain committed to strengthening our market position while maintaining operational efficiency. The investment in additional warehousing space aligns with our long-term growth strategy, particularly in the pharmaceutical sector,” Managing Director John De Silva said.

One positive sign is that LASD’s operating expenses relative to revenue declined from 12.4 per cent to 12.0 per cent, indicating that despite external cost pressures, the company is actively managing its overheads.

Despite the decline in quarterly earnings, management remains confident about its long-term strategy.

“Our continued expansion and strategic investments will enable us to capitalise on growing demand. This acquisition strengthens our ability to scale operations in a market that is experiencing increasing competition,” De Silva said.

Meanwhile, affiliated company Lasco Manufacturing Limited (LASM) delivered strong financial results despite ongoing cost pressures.

For the nine months ending December 31, 2024, revenue rose 3 per cent to $9.50 billion, with the December quarter alone showing a 2.5 per cent increase to $3.29 billion.

However, profit margins remain under pressure. Gross profit edged up 1.7 per cent to $1.20 billion, but gross profit margin slipped by 30 basis points to 36.7 per cent, reflecting higher input costs that were not fully passed on to customers.

Despite this, net profit for the quarter surged 16.6 per cent to $662.47 million, indicating that LASM’s operational efficiencies and cost-management strategies are bearing fruit.

“We continue to refine our supply chain operations to ensure cost fluctuations do not disrupt profitability,” Chairman James Rawle said. Rawle also emphasised ongoing sustainability efforts, including waste reduction, energy efficiency, and packaging improvements, which have contributed to cost containment and operational efficiency.