Keells Food Products PLC (KFP), a member of the John Keells group has posted its best ever results in the year ended March 31, 2012, with the company reporting an after-tax profit of Rs.129 million against a loss of Rs.55 million the previous year.
Its Chairman Susantha Ratnayake has told shareholders in the annual report that "it needs to be noted that the current year results are the best ever achieved by your company," which began operations in 1983 and currently claims market leadership in the processed meats industry.
At group level the after-tax profit of Rs.129.6 million compared with a profit of Rs.30.4 million made the previous year.
Ratnayake complained of erratic supply of chicken meat particularly during the second quarter of the year under review compelling imports at a higher cost which was not passed on to the consumer.
He said that KFP in addition to working with many established chicken farms have also inducted new players into the supply chain with the goal of increasing local chicken production to meet raw material requirements.
The year under review has seen procurement here of over 0.7 million kg of pork and over 1.2 million kg chicken in addition to 35,282 kg of spices and nearly 0.2 million kg of vegetables.
Ratnayake reported that their Ja-Ela factory which had been in operation for over 25 years had reached peak capacity despite several augmentations over the last few years and the KFP board is mindful of the need to invest in another facility to enhance current capacity. Several options were under consideration, he said.
KFP has now appointed a master distributor for their products in India following discontinuation of their manufacturing operation there after incurring substantial losses. Ratnayake hoped that the new business model will gain momentum and generate sufficient returns in the future.
Although exports to India had been hampered during the year due to restriction of the issue of import permits by the Indian authorities impacting in the steady supply of KFP products to the master distributor, and the sharp depreciation of the Indian rupee having an impact of the cost structure of the distributor, export volumes to India had grown by 16%. There was also satisfactory increase in exports to the Maldives.
The improved tourist arrival picture had also helped the KFP business in Sri Lanka.
The year under review had seen the company introducing several new products to the market – Cheesy Blast, Power Snack and Spicy Bite. The Power Snack was described as "a unique sausage product of chicken meat," combined with vegetables and rice. All new products have been well accepted by consumers, Ratnayake said.
He complained of the availability of unbranded sausages sold loose in the market compromising quality and hygiene standards and called on the authorities to take serious notice of this development and enforce proper hygiene to protect the consumer.
New markets were also being accessed by KFP in the North and the East by developing the retailer cold chain and creating consumer awareness of the product range.
KFP has a stated capital of Rs.274.8 million, a capital reserve of Rs.94.7 million and revenue reserves of Rs.83 million in its books.
Total assets ran at Rs.818.8 million and liabilities at Rs.366.3 million. JKH and subsidiaries owned 84.47% of the company with a few other shareholders owning slightly over one percent individually.
The company’s share traded at a high of Rs.172.10 and a low of Rs.72 during the year under review against a trading range of Rs.175 and Rs.65 a year earlier. Net assets per share were up to Rs.53.23 from Rs.38 the previous year.
The directors of the company are: Messrs. Susantha Ratnayake (Chairman), A.D. Gunewardene, J.R.F. Peiris, J.R. Gunaratne, S.H. Amarasekera, R. Pieris, A.D.E.I. Perera and M.P. Jayawardena.