AMIDST its search for an acquisition target, Lasco Distributors Limited (LASD) has continued to expand the distribution of products under the various consumer categories while it plots a path to expanding its footprint in export markets.

The distribution company has seen significant growth in some portfolios such as hygiene, health care and nutrition, food and beverage with the rebound in the economy following COVID-19 restrictions. This has also been complemented by the addition of several new categories in the last year with partners such as Uniliver and Lasco Manufacturing Limited opening them up to new trade channels such as the new impulse category with cookies and crackers.

“All the new products and brands have performed very well, quickly gaining traction and delivering accretive margins and growth rates. They also provided an opportunity to diversify our portfolio and channel focus, while strengthening our presence in core categories such as in nutrition where we have launched the Bright Side Farms almond milk range,” said John De Silva, managing director of Lasco Distributors, in an email response to the Jamaica Observer.

This has also been supported by the double-digit growth in exports which is based on a go-to-market execution strategy and getting closer to consumers in the various Caribbean and North American markets. Lasco Distributors’ revenue climbed 14 per cent to a historic $26.56 billion with gross profit improving 18 per cent to $4.58 billion.

“We will continue this approach in the new year, and also expand our export portfolio into key markets. Our business in Guyana has done extremely well and this market continues to be a top priority. In the short term, the North American opportunity will take precedent over our Latin American plans as a result of the very strong results we have achieved over the past two years,” De Silva added, regarding the export focus for the 2024 financial year.

Lasco Distributors was able to improve its gross margin from 16.62 per cent to 17.26 per cent in a year which saw point-to-point inflation average over nine per cent for most of the period. The managing director highlighted that this was a result of initiatives to improve operational efficiencies and changes to the product and channel mix plus measured price increases. The company is also maintaining a focus on brand building and expanding its distribution portfolio to assist in containing rising costs.

Lasco Distributors spent an additional $247.38 million on capital expenditure with the bulk of it being under construction. The expansion at White Marl, St Catherine has begun for the company’s distribution space along with the solar project meant to cut down on energy costs to be completed by the end of the year.

With $2.25 billion in cash, debt-free and the company generating a return on equity of 17.2 per cent for its shareholders in the 2023 financial year, the company has continued to pursue acquisition opportunities like its sister company Lasco Manufacturing. However, that search both locally and abroad has not yielded results which fit its criteria.

“We continue to evaluate mergers and acquisition opportunities and we have established very strict criteria based on strategic, cultural and financial fit and any potential transaction must be accretive to our financial performance. Using our selection criteria, any acquisition needs to be able to improve on that immediately or provide the opportunity for our operating model to be quickly implemented to deliver comparable or better results,” De Silva explained regarding acquisition opportunities.

While Lasco Distributors’ total expenses grew 11 per cent to $3.17 billion, the operating profit increased 28 per cent to $1.63 billion. Apart from minimally higher finance costs, the company’s profit before tax (PBT) hit $1.62 billion, a 28 per cent year over year increase and the highest recorded in its history. At the same time, the company’s net profit jumped by a third to $1.35 billion with earnings per share at $0.3853.

Total assets rose seven per cent to $13.38 billion with its inventory balance topping $4.47 billion and investments rebounding to $504.05 million at the end of the period. Total liabilities and shareholder’s equity were $4.96 billion and $8.41 billion, respectively.

After nearly two years as Lasco Distributors’ top boss, De Silva became a shareholder on March 3 as he was granted 5 million ordinary shares under the restricted stock units plan. Newly minted Lasco chairman James Rawle was also granted 10 million shares at the same fair value price of $2.70. The $40.50 million issuance of shares pushed the share capital from $472.69 million to $513.19 million, which is above the Junior Market’s $500 million share capital limit, but the company is yet to graduate to the main market.

Lasco Distributors shareholders are set to receive a $0.10 dividend on July 14 to shareholders on record as of June 30. This payment totals $352.57 million and is an increase from the $0.09 paid last year.

Lasco Distributors’ share price closed on Tuesday at $3.40 which gives it a price-to-earnings ratio of 8.82 times which is nearly half of the 15.65 times five-year average. The company’s share price traded at a 52-week high of $3.58, but this is below the June 2021 intraday high of $4.50 and February 2018 peak of $5. With a book value of $2.39, this translates to a price to book value of 1.42 times.

“The company maintains a positive outlook, based on the consistent results which validate our strategy and our ability to win. Transformational changes in our physical infrastructure and the way we leverage digitalisation are in progress and we continue to attract, retain and develop the best talent — positioning us well for continued profitable growth. The board had initiated several succession planning steps some time ago, in keeping with their mandate and that has been executed flawlessly, ensuring continuity of the operations while preserving the legacy of our late Chairman Lascelles Chin,” De Silva said.