Cargills 1Q15 turns green over strong top line growth

29 July 2015 03:21 am - 0 - {{hitsCtrl.values.hits}}

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Diversified retailer, Cargills (Ceylon) PLC group posted a net profit of Rs.403 million for the quarter ended June 30, 2015 (1Q16) from a net loss of Rs.28.1 million incurred during the same period last year amid an increase in the top line, supported by improved consumer sentiments, the interim results released to the Colombo Stock Exchange showed.

The earnings per share rose to Rs.1.74 from a loss per share of 13 cents a year ago.

The group revenue rose by 9 percent year-on-year (yoy) to Rs. 17.2 billion while the cost of sales fell by 7 percent yoy to Rs.15.3 billion leaving with a gross profit of Rs.1.84 billion, a 32 percent increase from a year ago.

“The group restructuring process resulting in channeled efforts of management to optimize resources and expertise whilst strengthening the balance sheet has yielded the expected results leading to enhanced efficiency,” the group said releasing its 1Q16 results.

The group started its restructuring process in FY 2013/14 which saw it shedding its brewery, Millers Brewery Limited to Lion Brewery (Ceylon) PLC for Rs.5.15 billion and the Rs.2.55 billion equity investment into the retail sector by the International Finance Corporation (IFC) in return for 8 percent stake last year.

The group’s retail sector continued to be challenged by the ‘deemed’ Value-Added-Tax (VAT) imposed on VAT exempted products that are essential for daily nutrition and are sourced locally.

“Continuation of this arbitrary fiscal policy is contradictory to national efforts of encouraging local agriculture and production and has far reaching implications on smallholder farmers who have been empowered by the steady markets and guaranteed minimum prices benchmarked by the private supermarket industry,” the company said.

Retail segment revenue grew by 6.3 percent yoy to Rs. 13.5 billion while the operating profit grew by just Rs.2.3 billion to Rs.363.2 billion.

Meanwhile, the Fast Moving Consumer Goods (FMCG) segment saw its 1Q16 top line growing by 24 percent yoy to Rs.3.1 billion and its operating profits by 210 percent yoy to Rs.425.8 million.

“The double-digit growth reported by our agriculture and livestock processing businesses indicates category growth driven by our strong portfolio of national brands; ‘Kist’, ‘Goldi,’ ‘Sams’, ‘Magic’ and ‘Kotmale,” the company added.

The group’s restaurant segment turned an operating profit of Rs.7.6 million from a loss of Rs.25 million a year ago on a revenue of Rs.636.9 million (up 17.1 percent yoy). The company said this segment is in an upward trend due to enhanced consumer spending.

Meanwhile, other incomes of the group rose 12 percent yoy Rs.374.4 million.

Total overheads increased by 13 percent yoy to Rs.1.42 billion leaving with an operating profit of Rs.796.5 million, up 68 percent yoy.

As of June 30, 2015 C.T Holdings PLC held 70 percent stake in the company while the Deputy Chairman and CEO Rajit Page held 6.45 percent stake.
The state-controlled private sector pension fund, Employees’ Provident Fund (EPF) held 3.38 percent, being the third largest shareholder of the company.

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Cargills 1Q15 turns green over strong top line growth

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