As inflation cools, profit heats up at Lasco companies

Affiliated companies Lasco Manufacturing Limited and Lasco Distributors Limited grew their earnings by double digits for the June first quarter, due to the easing of inflationary pressures and a deceleration of the cost of inputs.

Lasco Manufacturing has been particularly challenged by skyrocketing raw material prices, and shipment and energy costs, but for the first quarter the company scored $525 million in net profit, outpacing the earnings of the prior year by 27 per cent.

Revenue was also up eight per cent year-on-year.

“The supply chain stabilised considerably, and the local macroeconomic climate continued to improve, factors that were favourable for the business and facilitated the continuation of the momentum of prior year,” said Managing Director James Rawle, who was also recently appointed executive chairman of the company following the passing of Lasco group founder Lascelles Chin.

Lasco Manufacturing’s sales climbed to $2.8 billion in the quarter, due to growth in volume sales as well as price adjustments to its goods in the ‘refreshing beverage and water’ categories, the company said.

In the short term, Rawle says Lasco Manufacturing will depend on new products, but also look to acquisitions for growth.

Meanwhile, Lasco Distributors, which is the exclusive distributor of Lasco Manufacturing’s products, but also handles a range of consumer and pharmaceutical goods on behalf of local and foreign partners, made first-quarter profit of $447 million, up 38 per cent year-on-year, while revenue accelerated by 16 per cent to $7.3 billion.

Managing Director John De Silva said growth in the April-June period came from all key segments – consumer, hygiene, nutrition, and food and beverage – but was led by the pharmaceutical division, which benefited from the commissioning of a warehouse management system during the quarter.

The company has pumped some US$75 million into equipment and technologies over the past decade to slash costs and improve efficiencies. De Silva says the company has already started to see improvements in its operations from the new management system, which forms part of the company’s digital transformation initiative.

In Jamaica and around the world, inflation has been heating up because of the double whammy of the coronavirus pandemic and the war launched by Russia against Ukraine. The first crisis created disarray in supply chains due initially to a shortage of containers to ship goods across the world, then the war further upended trade leading to spikes in commodity prices.

In Jamaica, inflation reached as high as 11.8 per cent, but is now back to 6.3 per cent based on the July estimate. Large economies such as the United States and European Union countries have also seen a cooling of inflation in recent months.

karena.bennett@gleanerjm.com