Lasco plant project repriced at US$24 million
Published:Wednesday | February 22, 2012 | 12:00 AM
Steven Jackson, Business Reporter
Lasco Manufacturing Limited has for the third time disclosed revised figures for its plant expansion budget, now totalling US$24 million ($2 billion), or more than double its original projection.
The factory investment is a key component in the company's quest for global expansion.
"The expansion is actually US$24 million," said Dr Eileen Chin, who heads the manufacturing operation.
It was previously revised to US$16 million from the US$11 million first announced last June.
Wednesday Business was unable to clarify what accounted for the rise in the budget. However, Dr Chin said that construction was within budget.
"We are still within budget," she said.
Financing plans
Lasco Manufacturing still records no long-term debt on its books, reflecting the company's drive to finance the expansion mainly via its cash flow.
"We are in the constructing stages and the machinery is being purchased. Up to now we are on track," said Chin.
Lasco Manufacturing's balance sheet at December 2011 reflects J$533.7 million as capital works in progress towards the internal financing for the acquisition of machinery and laboratory equipment as well as down payment for the start-up of the buildings in the expansion project previously announced, Dr Chin stated in her accompanying remarks to the financials.
The company reported net cash of J$70 million.
"This project is expected to cost US$24 million and will be financed through internally generated cash flow and debt financing. The payback period is projected to be five years and is not expected to negatively impact the company's profitability during build-out and first year of operations," Chin said.
"Once completed, this will lead to improve efficiencies and productivity, reduce operational costs, increase product portfolio, sales and profitability."
The company expects to complete construction of two new buildings on its White Marl, Spanish Town, facility by March/April and install new machinery and equipment by August, Chin told Wednesday Business.
Lasco Manufacturing originally projected to expand the factory from 100,000 square feet to 240,000 square feet, allowing for the addition of 10 product lines atop the 300 already made there.
The company projects that sales will double to J$6 billion by 2014 as a result.
At nine months ending December 2011, the company reported sales of J$2.3 billion and untaxed profit of J$451 million. The previous period, it made revenue of J$2.2 billion and profit of J$291 million (J$380m pretax).