Lasco Distributors Limited (LASD) has discontinued its distribution of Unilevers dry food and cold storage brands today. This means Lasco will not be distributing brands such as Red Rose Tea, Lipton, Breyers Ice Cream, Flora, among other products. However, the company will continue to distribute Unilevers Home and Personal Care brands such as Breeze, Dove, St. Ives and Axe to name a few. The decision was made in an effort to reduce operational costs and to improve logistics and the efficiency of Lasco’s service.
Unilever Food Portfolio represents 28% of its business but for Lasco Distributors, the distribution of Unilever brands adds up to an estimated 1% of the business.
Lasco has been revamping and improving efficiency right across the board recently in an effort to increase the company’s profitability. Lasco spent $725 million to expand their warehouse in White Marl by 100,000 square foot recently. Compounded by several upgrades which were made to Lasco’s IT system, the company’s expenses have been increased significantly. Furthermore, LASD performance has been affected by expenses it incurred for legal fees paid in relation to the Pfizer case. Lasco was optimistic that the court would rule in its favour US$490.1 million plus interest in damages, after a 7 year injunction from Pfizer preventing LASD from marketing certain pharmaceuticals. The company however received only JA$273 million; a huge setback for Lasco.
Even though LASD experienced a $1.25 billion revenue increase in the financial year ending March 31st 2017, the company’s net profit fell by 14.9% to a total of $609.7 million when compared to 2016. LASD has also been underperforming on the Jamaica Stock Exchange market. The stock price fell by 33.9% between November to December 2017 and is currently trading at $3.99. We are still looking to see how Lasco Distributors Limited performs for 2018 as the company continues to cut costs and improve service delivery.
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