Key Points:

LASCO Distributors reported a 15.3 per cent drop in net profit to $304 million for Q1 2025/26, with revenues dipping slightly by 0.8 per cent to $7.27 billion, mainly due to supply chain delays impacting the hygiene product segment.

The company is focusing on strategic realignment in healthcare distribution, deepening partnerships with major global pharmaceutical firms, while nutrition, food, and beverage categories maintained steady performance and some segments saw strong growth.

Operating expenses rose 4.3 per cent to $982 million due to investments in promotions, staff, and technology, narrowing profit margins; LASCO also expanded its assets by 10 per cent including a $478-million investment property purchase, indicating diversification beyond distribution.

LASCO Distributors Limited is facing a slow start to its 2025/26 financial year, with the company navigating the ripple effects of global supply chain disruptions and strategic changes across its product categories.

For the three months ended June 30, 2025, the company reported a 15.3 per cent decline in net profit, sliding to $304 million from $359 million in the same period last year. Revenues dipped slightly, by 0.8 per cent, to $7.27 billion, as performance was weighed down by challenges in its hygiene segment, which comprises globally recognised personal care brands such as Dove, Degree, TRESemmé, and Jack & Jill, which suffered from shipping delays.

“The hygiene portfolio was impacted by supply chain delays, and it is expected this will improve in the second quarter to support a recovery in this category,” the company stated in its quarterly report.

Lasco Distribution’s nutrition, food and beverage categories did, however, deliver results in line with the prior year; however, strong double-digit growth was achieved in certain segments in line with the company’s diversification strategy. Meanwhile, its health-care category, managed through Lasco’s Pharmaceutical Division, is undergoing a strategic realignment. The company has deepened collaboration with global pharmaceutical giants such as Roche, Merck, Novartis, Bayer, Cipla, AstraZeneca, and CSL Behring. This shift aims to bolster Lasco’s role as a major pharmaceutical distributor, with a sharper focus on responsiveness and operational efficiency across medical product lines.

“The company is completely focused on improving execution and operational efficiencies, leveraging recent investments in technology and training,” it noted. “Export business is expected to continue to deliver accretive growth.”

These changes, however, have increased its operating expenses by 4.3 per cent to $982 million, largely due to increased investment in promotional campaigns, staff compensation, and the roll-out of digital and operational infrastructure upgrades. As a result, the company’s operating expense ratio increased to 13.5 per cent of revenue, up from 12.8 per cent in the corresponding period. Last year, despite pressures, Lasco managed to generate $232 million in cash from operations, signalling continued liquidity strength. Gross profit for the quarter fell by 4.7 per cent, or $62 million, to $1.26 billion. This pullback was coupled with a narrowing of margins, from 18.1 per cent to 17.4 per cent. Lasco, like many in the regional distribution space, has been grappling with higher costs in an inflationary environment where global shipping and logistics remain volatile. The company’s total assets climbed 10 per cent year-over-year to $16.61 billion, reflecting growth in inventory and receivables. Inventories stood at $5.73 billion, up 15.1 per cent, while receivables increased 10.3 per cent to $4.84 billion, underscoring higher stocking and sales volumes even amid softer revenues. Shareholders’ equity increased by 9 per cent to $10.8 billion, bolstered by retained earnings and reinvestment into the business. Notably, the market value of shares outstanding reached $12.66 billion at the end of the quarter. This is an indicator that the investing public views the company as being worth more than its book value. The company also disclosed its recent acquisition of investment property at 38½ and 40 Red Hills Road in Kingston. The commercial property, valued at $478 million, is expected to provide both rental income and capital appreciation, signalling that Lasco may be exploring new income streams outside of core distribution.