Wed | Nov 29, 2023

LasM plateaus on efficiencies, expanding for more growth

Project to add new production lines back on track

Published:Friday | November 18, 2022 | 5:50 AMNeville Graham - Business Reporter
File Lascelles Chin, executive chairman of the Lasco group of companies.

Lasco Manufacturing Limited has reactivated its stalled expansion programme at White Marl, St Catherine. Chairman of the Lasco group of companies, Lascelles Chin, said the project was in the works from three years ago but was delayed by the COVID-...

Lasco Manufacturing Limited has reactivated its stalled expansion programme at White Marl, St Catherine.

Chairman of the Lasco group of companies, Lascelles Chin, said the project was in the works from three years ago but was delayed by the COVID-19 pandemic, which hampered the approvals process.

He now expects the expanded factory to be up and running by 2024.

“That expansion should have been done long ago,” Chin said in an interview with the Financial Gleaner.

“We have the funding and everything, and with COVID easing up we can move ahead,” he said.

The Lasco White Marl factory and warehouse complex sits on 12 acres that were once home to the Guinness brewery. It has about 440,000 square feet of manufacturing and warehousing space, according to Chin.

Under the expansion project, Lasco will add 75,000 square feet of space, growing the total space to 515,000 square feet.

New manufacturing lines are to be installed, but Chin, for competitive reasons, declined to say what they would be used for.

He also declined to comment on the cost of the expansion project.

Lasco Manufacturing is one of three affiliates, the others being Lasco Distribution Limited and Lasco Financial Services Limited.

The distribution company is king in revenue generation among the three, but the manufacturing operation makes the most profit, a review of their financials show.

The chairman and founder of Lasco said that over the past three years, the group’s manufacturing and distribution arms have been improving processes and extracting efficiencies, growing their bottom lines in the process.

“You will not find any area where there are inefficiencies because we’ve been improving over the last three years,” he asserted. “You’re talking about conversion of materials that you don’t waste, labels, and so on — every little bit counts.”

The refocus on the expansion project comes at a time when, according to Chin, Lasco Manufacturing’s efforts at finding cost savings had plateaued.

Over five years, Lasco Manufacturing grew revenue steadily from $6.66 billion in fiscal 2018 to $9.48 billion in 2022 — the companies’ financial year ends in March — while within that same stretch, annual profit climbed from $560 million to $1.7 billion.

Comparatively, Lasco Distributor’s sales grew from $16 billion to $3 billion, while profit, which had climbed to a new high in 2018 at $1 billion, slipped dramatically then recovered over the years to $1.02 billion at year ending March 2022.

At Lasco Distributors, which has been headed by John de Silva since March 2021, the current focus has been on reorganising logistical arrangements and streamlining markets. It is the exclusive distributor for its manufacturing affiliate, but also represents a range of local and foreign brands.

Speaking with the Financial Gleaner, de Silva said job one for him, on arrival, was a reset of the marketing and communications strategy to focus on product differentiation, rather than the straight pricing strategy used over the years.

“Everybody says Lasco offers the best value for money. What they were not so aware of was the quality of the products, and we shifted a lot of the communication to speak around the quality,” de Silva said.

The communication strategy, he said, is designed to spot gaps in the categories of products that customers need and plug them. Under his watch, five new products have been introduced.

In their most recent financial reports relating to the half-year ending September, Lasco Manufacturing recorded sales of $5.47 billion and profit of $883 million, while Lasco Distributor grew sales to $12.86 billion and made a profit of $587 million.

Commenting on the performance of the two companies, as well as the financial operation, which specialises in money services and microfinance, Chairman Chin, 84, said he is satisfied that the group was in a strong position and that it’s future was assured.

“We have good managers, and for the future of the company we will always have professional managers, and we will continue along that vein,” Chin said.

Lasco Manufacturers is headed by James Rawle and Lasco Financial by Jacinth Hall-Tracey.

Asked whether the companies would be graduating from the junior market to the main market of the Jamaica Stock Exchange, Chin said they were bound by rules that call for companies remaining on the junior market for at least five years after the 10 years of tax breaks granted to new listings had expired.

The three Lasco companies listed in October 2010, which means they have to remain listed for three more years to stay in compliance.