Manufacturing operations hinder Cold Stores June bottom line

Ceylon Cold Stores PLC (CCL), the John Keells group’s retail and manufacturing subsidiary, saw its net profits for the June quarter (1Q18) falling 21 percent year-on-year (YoY) to Rs.675.80 million due to a weakened performance of its manufacturing unit.

The basic earnings per share of the firm, which manufactures the Elephant House brand ice creams and beverages and operates the supermarket chain, Keells Super, fell to Rs.7.11 from Rs.9 YoY.
The firm’s revenue expanded 20 percent YoY to Rs.12.34 billion through heightened retail operations during the quarter, which included a major holiday season.

The cost of sales increased 26 percent YoY to Rs.10.68 billion, resulting in the gross profits falling 6 percent YoY to Rs.1.66 billion.

Although the other operating income increased 32 percent YoY to Rs.328.23 million, the operating profits fell 18 percent YoY to Rs.975 million due to moderate increases across all operating expenses.
CCL’s asset base increased to Rs.23.19 billion at the end of June, compared to Rs.22.46 billion three months earlier, with the increases coming through property, plant and equipment and short-term investments. The firm is currently constructing a new ice-cream manufacturing facility.

The company’s long-term borrowings increased by Rs.119 million to Rs.248.53 million, while its short-term borrowings increased by Rs.182.50 million to Rs.324.17 million and its bank overdrafts increased to Rs.1.08 billion from Rs.726.60 million during the three-month period.

CCL’s manufacturing segment profit after tax fell to Rs.698.50 million from Rs.901.18 million YoY, while revenue fell to Rs.3.38 billion from Rs.3.55 billion YoY.

The retail operation increased its profit after tax to Rs.277.12 million from Rs.208.82 million YoY, while total revenue increased to Rs.9.03 billion from Rs.6.81 billion YoY. The country’s largest onglomerate, the John Keells group, owns 81.31 percent of shares in CCL, through the parent John Keells Holdings PLC and Whittal Boustead (Pvt.) Ltd.