Lascelles reports bigger profits
but weak 4.3 per cent growth in 2007
published:
Wednesday | December 5, 2007
Lascelles Wines and Spirits added a new rum to its portfolio earlier this year. Spirits remain a top money spinner for conglomerate Lascelles deMercado.- Winston Sill/Freelance Photographer
Lascelles deMercado and Company Limited has improved on last year's earnings to hit a new record $2.66 billion of net profit, an increase of $110 million at year end September 30, but the 4.3 per cent growth that it reflected came at a decidedly slower pace than the past four years.
Since 2003 when the conglomerate's earnings collapsed below the billion-dollar mark, the company's net profit performance has remained on an upward trajectory, moving from earnings per share of $9.83 to $27.76 in the 2007 period, to reflect average growth of 45 per cent per annum.
In 2006, for example, profits grew 35 per cent.
Lascelles' balance sheet was also healthier, with improved assets of $24 billion - $10 billion of which is held as investments largely in equities and government-issued debt securities - and a stronger capital base which rose by four billion to $22.5 billion.
Sales rose by $2.65b
On its profit and loss statement, the group's annual sales also rose by $2.65 billion or 14.4 per cent to $21 billion, to top the $20 billion mark for the first time.
But a 32 per cent increase in expenses which topped $5.8 billion in the review year, eliminated the revenue gains to return a lower operating profit of $2.3 billion and a near three-point drop in the margin to 11 per cent versus 13.7 per cent at September 2006.
Expenses rose by $1.4 billion to $5.8 billion during the year, more than half or $734 million of which was reflected in a bigger salary bill that topped $2.4 billion, up from $1.7 in the prior year.
The group, however, regained most of its lost ground from improved net finance income, which rose by $240 million to notch pre-tax profits higher, from $3.11 billion in 2006 to $3.2 billion.
Sales were led by Lascelles' spirits and sugar segment whose turnover grew 24 per cent to $12.6 billion to remain the star in the conglomerate's holdings.
The segment also helped to offset the declines in operating revenue reported under the general insurance, investments and transportation services businesses.
Insurance's misfortunes would have flowed from the storm and rains since August.
In its geographic segment mix, Jamaica added a near two points to market share, measured in turnover, rising to 77.6 per cent compared to last year's 76.1 per cent.
Jamaica accounted for $16.3 billion of revenues, up 16 per cent in the year, while sales in overseas markets topped $4.7 billion to grow by 8.2 per cent.
Lascelles is however attempting to grow its international markets and has negotiated a deal with Angostura Holdings of Trinidad that will, if acceptable to shareholders, eventually see the merger of the two company's spirits businesses.
The deal, under which Angostura plans to bid for 49.24 per cent voting rights in Lascelles, remains subject to regulatory oversight and shareholder approval.
The news has sent Lascelles' stock to a historic high of $565 per share Tuesday.
On Monday, the Jamaica Stock Exchange said it was still re-viewing the offer to ensure conformity to takeover rules.
Angostura has said its offer for just under 86.5 million of Lascelles' 96 million ordinary stock units less the portion it already owns, and 5,028 of its 6 per cent preference shares, does not constitute a takeover, but the JSE is scouring the deal to independently verify that claim.
Lascelles in its profit and loss statement reports that its subsidiaries contributed $2 billion of the $2.66 billion net profit in its 2007 year. Wray and Nephew, which is the conglomerate's top earner and the main target of the Angostura deal, would have contributed a big portion of that amount.
