LASD Sees Marginal Lift in Q2 Profits, But Still Down YTD

• After a weak first quarter, Lasco Distributors Limited (LASD) experienced a modest 4.1% growth in profits for Q2 2024 to $359.28Mn aided by topline growth and higher other income. However, subdued earnings in Q1 2024 meant that earnings were down for the first six months of the year. The overall performance was weighed down by higher operating expenses. 
• In Q2 2024, LASD saw a turnaround in earnings, supported by a 5.7% rise in revenues to $7.64Bn. This growth was fueled by robust gains in its export business (+25%) and pharmaceutical segment (+14%).
• However, this did not translate to its year-on-year performance. Increased costs related to sales and promotions, employee expenses, technology upgrades, and depreciation pushed operating expenses higher. Additionally, financing costs surged by 563.4%, further weakening its performance. Q1 results were particularly affected by supply disruptions, which limited product availability and caused a 19.1% decline in net profit.
• As a result, LASD reported lower net profits of $718.18Mn (-9.4%) for its H1 2024 reporting period.
• However, in the short term, the company plans to implement contingency measures to improve inventory levels, while mitigating the effects of supply challenges to meet demand. These actions, combined with disciplined cost management may drive future topline growth and improve profitability. LASD also remains committed to its investment and growth strategies, emphasising portfolio innovation, expanded capabilities, and stronger consumer communication and engagement.
• LASD’s stock price has appreciated by 20.9% since the start of the year closing Thursday’s trading session at $4.56. Currently, the stock trades at a P/E ratio of 11.68x, below the Main Market Manufacturing and Distribution Sector average of 13.51x.

(Source: JSE & NCBCM Research)