Cargills Ceylon PLC, Sri Lanka’s largest privately-owned retail chain, increased its March quarter net profit by a strong 39 percent to Rs.412.5 million or Rs.1.84 a share due to stronger top line and a disciplined cost structure, the interims showed.
The retail and fast-moving consumer goods (FMCG) segments performed well while the restaurant businesses turned a profit too. The top line grew 27 percent year-on-year (YoY) to Rs.18.9 billion, while the cost of sales grew at a slow pace of 24 percent YoY to Rs.16.6 billion. The gross profit growth was 60 percent YoY to Rs.2.3 billion from a year ago. The overheads were well contained as the administrative expenses dropped 40 percent YoY to Rs.849.5 million. The distribution expenses following suit declined 7.4 percent YoY to Rs.638.3 million.
The unclassified other expenses saw a steeper decline by 55 percent YoY to Rs.139.6 million. Meanwhile, for the year ended March 31, 2016, the group posted a net profit of Rs.1.62 billion or Rs.7.25 a share, up 182 percent. The top line rose 16 percent to Rs.71.4 billion and the cost of sales rose 13 percent to Rs.63.5 billion, resulting in a gross profit of Rs.7.99 billion, up 41 percent. The segmental results showed the group’s key retail segment stretching its operating profit by as much as 80 percent to Rs.1.68 billion, while the revenue grew 13 percent to Rs.56.1 billion. The group FMCG segment increased its operating profit 134 percent to Rs.1.66 billion on a revenue of Rs.17.7 billion, up 24 percent. The restaurant business, which was until recently had been the problem child in the group portfolio, turned in an operating profit of Rs.124.8 million from a loss of Rs.69.3 million a year ago. Cargills suffered from the deemed value-added tax (VAT) imposed on retail trade but the recent budget proposed to exempt both the retail and wholesale sectors from it.
As of March 31, 2016, C T Holdings PLC held a 70.20 percent stake in the company while Director/Chief Executive Officer Ranjit Page held a 6.68 percent stake being the second largest shareholder. The state-controlled private sector pension fund, the Employees’ Provident Fund held a 3.28 percent stake, slightly down from 3.38 percent held a year ago, being the third largest shareholder.