Cargills acquires seed manufacturing firm for Rs.150mn

Cargills (Ceylon) PLC, one of Sri Lanka’s leading food & beverage and retail operators, has acquired a seed manufacturing company for Rs. 150 million recently, while growth in retail operations boosted the group’s performance during the second quarter of 2017 ended September 30, 2016 (2Q17).
Cargills subsidiary Cargills Agrifoods Limited acquired 100 percent of the shares in Ceylon Agro Development Company (Private) Limited, which engages in the production and distribution of agricultural seeds, for Rs. 150 million during 2Q17.

For the quarter, Cargills posted a net profit of Rs. 531.05 million, up 48.46 percent from Rs. 357.72 million Year-on-Year (YoY), while earnings per share increased to Rs. 2.37 from Rs. 1.60 YoY. 
Revenue for 2Q17 rose 21.81 percent YoY to Rs. 21.12 billion, while cost of sales increased 19.67 percent YoY to Rs. 18.51 billion. Net finance costs increased 110.29 percent YoY to Rs. 292.35 million, while income taxes increased 147.22 percent YoY to Rs. 562.96 million.

While the net assets per share increased to Rs. 65.93 in 2Q17 from Rs. 63.04 at the start of the financial year, the total asset value increased to Rs. 44.39 billion from Rs. 42.21 billion. The increase was mainly due to Cargills investing Rs.3.81 billion in its associate Cargills Bank as equity.
Short-term borrowings increased to Rs. 12.85 billion in 2Q17 from Rs. 11.31 billion at the start of the financial year, while long-term borrowings were reduced to negligible levels from Rs. 198.30 million during the same period.
For the 6 months so far in the financial year, Cargills posted a profit of Rs. 1.30 billion, up from Rs. 748.36 million YoY, while revenue increased 21.93 percent YoY to Rs. 42.09 billion, and cost of sales increased 19.91 percent YoY to Rs. 36.93 billion.
The 6-month period saw retail operations bringing the largest operating profits with Rs. 1.6 billion increasing from Rs. 660.09 million YoY, and a revenue contribution of Rs. 33.38 billion, compared to Rs. 27.16 billion YoY.

The fast moving consumer goods segment contributed with Rs. 1.13 billion in operating profits, up from Rs. 840.55 million YoY, and Rs. 9.97 billion in revenue, up from Rs. 8.62 billion YoY.
Restaurant operations brought in just Rs. 131.86 million in operating profits, up from Rs. 48.35 million YoY, while a revenue of Rs. 1.68 billion was recorded, up from Rs. 1.34 billion YoY.
The Page family controls just above 81 percent of the shares in Cargills, while the government controls around 4.5 percent of the shares through the Employees’ Provident Fund, state banks, and The Associated Newspapers of Ceylon Limited.