Ceylon Cold Stores reports solid December profits on rising consumer spend

Offering a glimpse into the Sri Lankan consumer behaviour in the final three months of last year, Ceylon Cold Stores PLC reported some solid top and bottom-line performance for the December quarter, reflecting strengthening consumer demand in the economy, although partly aided by the year-end seasonal pop.

The John Keells Holdings group reported revenues of Rs. 39.52 billion for the October – December quarter, up 14.3 percent from the same period in 2023.

The company’s share added Rs.2.20 or 2.43 percent on Monday to end at Rs.92.60.

This was supported by the company’s both manufacturing and supermarket segments which gave an idea of the shifts in consumer behaviour and also how much they were willing to spend on where they want to spend.  

For instance, the company’s manufacturing segment which produces Elephant House branded fizzy drinks, frozen confectionary and dairy products made revenues of Rs.7.83 billion for the quarter, up 26.9 percent from the same period in 2023.

It appears that the consumers are gradually starting to spend on discretionary products which was made possible from the extremely low general price levels after repeated cuts to fuel and electricity tariffs.

The sector reported an operating profit of Rs.1.49 billion for the quarter, up 161.7 percent from the same period in 2023. This reflects that its manufacturing business was not just supported by the increased top-line but also from the softer raw material prices across its supply chain.

Further, its Keells supermarket chain generated revenues of Rs. 32.52 billion, up 11.1 percent in a sign of increased footfall as well as higher basket values. The retail business generated operating profit of Rs. 1.71 billion, up 45.7 percent from the same period in 2023.

At a consolidated level, the company saw its gross margin expanding from 11.6 percent to 13.8 percent as cost of sales rose by 11.0 percent, lower than the 14.0 percent growth in revenues.

The company appears to have spent heavily on selling and distribution as such expenditure rose by 41.0 percent to Rs.1.63 billion while administrative expenses rose by 15.0 percent to Rs.1.49 billion.

The company reported an operating profit of Rs.2.54 billion, up 45.0 percent from the year earlier period.

The net finance cost meanwhile fell by 35.0 percent to Rs.503.73 million as total loans fell while the borrowing costs eased during the period.

The company reported earnings of Rs.1.45 a share or Rs.1.38 billion for the December quarter compared to 73 cents a share or Rs.700.91 million reported in the year earlier period.

For the nine months through December 2024, the company reported earnings of Rs.4.01 a share or Rs.3.81 billion, compared to Rs.1.90 a share or Rs.1.81 billion in the corresponding period in 2023.

The sales for the nine months were Rs. 115.84 billion, up 12.0 percent.

John Keells Holdings has a 70.66 percent stake in Ceylon Cold Stores as of December 2024.