The retail sector contributed 44% towards the Group turnover with another outstanding year. During 2011/12 the Group reported an operating profit in excess of Rs 4 billion clearly indicates a steady growth of the Group’s retail, plastic and rubber sectors and the reported results make a strong statement of the Groups diversity as the above results are after absorbing the adverse impact of a staggering wage hike in the plantations sector earlier during the financial year.
The growth in the operating profit excluding the plantation sector is a staggering 96% and is yet another indicator of its strong performance during the year. The profit before taxation of Rs 3.3 billion is 18% above last year and yet another noteworthy indicator where the growth in the “Top Line” is reflected in a “Bottom Line” growth which is even higher.
During the last 12 months, Group debt levels were around Rs 4 billion and despite significant new investment the Group has managed its debt levels without a significant increase and the overall Gearing Ratio has reduced from 39% to 33% during this period and as at March 31, 2012 the Group debt was Rs.3.8 billion.
The retail sector continued its steady performance with a turnover of Rs.14 billion and an operating profit of Rs.1.5 billion during the 12 months ended March 31, 2012.
The turnover of this segment grew by 27% when compared to the previous year with an increase of 81% in the operating profit which includes a part of the capital gain resulting from the Richard Pieris Distributor’s investment in (Group’s disposal of its associate undertaking) – Asian Alliance Insurance PLC.
During the three months ended March 31, the sector opened two Arpico Modern Homes furniture outlets in the towns of Ja-Ela and Kandy and one showroom in the town of Pottuvil.
There was much emphasis on management of overheads and inventory in the light of energy prices and drop in consumer confidence with adversities in the macro economic environment. However the company continued its focus on marketing activities with the commencement of its Avurudu campaign towards the end of the quarter.
The plastics sector recorded a turnover of Rs 5 billion and an operating profit of Rs 662 m for the 12 months ended March 31, The turnover was 29% higher than the corresponding period of the previous year and the operating profit increased by 44% compared to last year. During the final quarter the sector experienced a significant growth in its sale of sofas and the manufacturing activities were further strengthened.
The surge in the construction industry enabled the PVC pipes operation to report its highest sales during the quarter and improvements were made in the manufacturing process over the last three months. The re-distribution division maintained steady growth in terms of both sales and profitability despite immense competition in the market place
The Group’s Plantation Sector comprises three publicly quoted companies namely Kegalle Plantations, Namunukula Plantations and Maskeliya Plantations. Whilst Kegalle and Namunukula Plantation Companies continued to make profits Maskeliya Plantations incurred losses mainly due to high wages and gratuity provision. Auction prices in both Tea and Rubber were seen a steady increase especially in the last few weeks of the period. The rupee depreciation, better quality, and reduced supply due to low crop all contributed towards robust prices for the two crops.
All elevations of Tea were priced high, with the low grown recording the highest increase. The entire plantation industry was experiencing significant uncertainties due to political unrest prevailing in the Middle East due to the heavy exposure to the region. Sanctions imposed by USA on Iran, together with unrest in Syria, demand for Tea may be negatively affected during the future periods. Oil Palm fetched reasonably high prices but slightly lower in comparison to the previous quarter, continued to contribute positively towards the sector profitability whilst other crops such as Coconut and Cardamoms had slight profits during the quarter.
The Tyre Sector recorded a turnover of Rs.2.8bn, a growth of 12% with an Operating Profit of Rs.300m during the year ended 31 March 2012 which reflected a 14% increase when compared to reported results of 2011. During the period under review Arpidag International (Pvt) Limited was accredited with the ISO 9001:2008 certification which is an upgrade of the certification which was secured in 2001.
The Rubber Manufacturing Sector which includes the Export of rubber products reported a Turnover of Rs.2.5bn and an Operating Profit of Rs.139m during the last financial year. The turnover of this segment has reported a growth of 15% and a complete turn around in terms of profitability where the sector incurred an Operating Loss in 2011 amounting to Rs.25m. Aggressive sales and marketing strategies in the latex foam business enabled it to achieve the highest level of sales volume in the recent history. The devaluation of the rupee had a favorable impact on the sector as a whole.