Ashford W Meikle, Business Reporter

FOR ITS second quarter to March 31, 2007, conglomerate Lascelles deMercado has posted an increase in its revenue, but rising costs and expenses have depressed the company's net income for the quarter.

Compared to its 2006 results, the company's operating income rose by 17 per cent during the quarter, to $5.3 billion, or $800 million more than the previous year.

However, a 29 per cent increase in Lascelles' costs resulted in a three per cent decline in its operating profit, which fell by 44 per cent to $270 million.

But, while the conglomerate's net income also plunged by 42 per cent, to $350 million, analyst and deputy general manager of Stocks and Securities, Mark Croskery, says Lascelles has returned a fair performance.

"The business is seasonal; the first quarter is usually the best quarter and, in fact, they had a record first quarter.

Those results are up 55 per cent over the previous year," Croskery told the Financial Gleaner, referring to its net profit performance.

Croskery, who is also the deputy general manager at the brokerage firm, Stocks and Securities, explained that with the onset of the sugar cane crop in the second quarter it is not unusual to see the increase in expenses.

Cheap valuation

"In the second quarter they booked a lot of more marketing and other expenses because this is the quarter to book expenses," he said.

In fact, according to the analyst, Lascelles' six months' results - which saw revenue increase by 17 per cent, while net profit grew four per cent to $1.2 billion - reflect a more accurate assessment of the company's performance.

I think they look better than what is on paper; the book value is now about $209," said Croskery. "If you are going to buy it at ($240), it's relatively cheap from a valuation basis."

ashford.meikle@gleanerjm.com

Source: Financial Gleaner, Friday, June 1, 2007