LASD Reports Increased YoY Net Earnings in FY 2020/21

• Lasco Distributors saw a 25.3% increase in net profit to $909.48Mn (EPS: $0.26) for FY 2020-21 reflecting higher revenues and lower operating expenses, which were tempered by the 5.8% (or $ 919.05Mn) increase in cost of sales for the period. 
• Revenues rose 4.1% (or $789.81Mn) buoyed by growth in its consumer division yoy of 5.6% (or $877.62Mn). However, its Pharmaceutical division saw a slight decline for the period of 2.3% (or -$87.80Mn) when compared to the corresponding 2020 period. 
• The company’s bottom-line also benefited from a 10.3% and 21.9% reduction in administrative and other expenses, and selling and promotion expenses, respectively, reflecting lower staff costs, advertising and promotion expenses. 
• Higher tax expenses also tempered the improvement in the bottom-line as LASD commenced paying corporate tax at 25% in October 2020, as its 10 year tax benefit under the JSE Junior Market expired. 
• In 2021, margins could also be affected by rising global commodity prices, the weaker local currency and supply chain restrictions that are driving up imported input costs. This would raise direct costs and put downward pressure on LASD’s gross margin, especially as the weak local economy limits its ability to fully pass the higher costs unto consumers. 
• Since the start of the year, Lasco Distributors’ stock price has appreciated by 25.0% and currently trades at a P/E ratio of 16.1x earnings, which is below the junior market distribution sector average of 28.2x earnings.

(Source: Company Financials)