Cargills (Ceylon) PLC reported higher revenues for the quarter ended March 31, 2021 (4Q21) as demand returned to its expansive food and beverages business, but the contribution from the group’s key supermarket business languished.
The company which operates the country’s second largest supermarket chain reported revenues of Rs.30 billion for the quarter under review, up 6.62 percent year-on-year (YoY) as sales declined at its retailing business, while other segments recorded sound growth.
The supermarket chain reported revenues of Rs.22.7 billion for the quarter, little changed from Rs.22.3 billion in the same period last year, despite the competitor store chains recording robust sales growth during the period propelled by stronger consumer demand.
It wasn’t clear what caused this slowdown despite new store openings and increased e-commerce operations.
Cargills opened 43 new outlets during the financial year, representing 8.8 percent of retail space bringing its total retail footprint to about 450 stores.
This company also invested in a new e-grocery store titled, ‘Cargills Online’ commencing its operations in August 2020 as it built necessary IT infrastructure to cash in on the growing e-commerce trade.
As the retail segment contracted its operating profits by as much as 31 percent to Rs.680.7 million from year ago, that weighed on the group’s operating profit, which also narrowed little under 2 percent to Rs.2.06 billion for the quarter.
However, as the new stores mature, they could contribute more towards the group’s top and bottom lines, although in the near term the performance could be weighed by heavier investments made in the stores and their overheads.
Meanwhile Cargills group’s food and beverage manufacturing business did extremely well during the final three months of the financial year with sales rising by nearly 30 percent YoY to Rs.6.26 billion as people consumed their frozen and other confectionaries such as ice creams and dairy products.
The restaurant business of the group, with its KFC franchise and TGI Fridays’ franchise, also recovered with revenues recording at Rs.1.05 billion for the quarter, up from Rs.959.9 million a year ago.
The group reported earnings of Rs.6.80 a share or Rs.1.75 billion for the quarter under review, compared to earnings of Rs.3.99 a share or Rs.1.03 billion in the year earlier period, as tax reversal strengthened the bottom line in the incumbent period.
For the year ended March 31, 2021, the group reported earnings of Rs.13.51 a share or Rs.3.48 billion compared to earnings of Rs.10.47 a share or Rs.2.69 billion. The full year sales rose by 5.19 percent YoY to Rs.112.6 billion.
Cargills Ceylon promoters, C T Holdings PLC has 69.84 percent stake in the company, apart from individual holdings in the company by the Page family members. The Employees’ Provident Fund has 3.27 percent stake being its third largest shareholder.