CARGILLS (CEYLON) - http://www.cse.lk/cmt/upload_report_file/457_1353158453264.pdf
Cargills (Ceylon) PLC, a member of the C T Holdings Group, is pleased to present to you the Provisional Financial Statements for the six month period ended 30th September 2012.
The Group reports a strong performance for the first half of the financial year, despite challenging market conditions and reductions in
consumer spend. Transaction growth in the Retail sector was below expectation while a decline in the consumption of branded FMCG goods
continues. The trend was more evident in the urban markets where the increase of fuel and utility prices has had a greater impact than in the
regions. Despite these set-backs, the Group turnover during the six months period saw an increase of 20.5% to reach Rs 27.9 Billion.
Gross profit of the Group recorded a growth of 24.2% during the six months period largely reflecting the performance of Retail, Restaurants
and Manufacturing segments that continue to hold the Group in good stead, countering losses incurred by two of our newly acquired
businesses. The Group recorded an overall growth in Operating Profit of 17.2% for the 2nd quarter and 19.2% for the six months period.However profit-after tax for the period has declined by 39.6% due to the substantial increase in interest cost attributed to the new acquisitions.
We are particularly pleased with the performance of our dairy segment. Our investments in capacity expansion and new production lines see
an unrivalled product portfolio and supply strength towards long term market leadership in the dairy segment. Investments have been made
into state-of-the-art UHT milk production which would substantially increase production volumes while the added capacity of the yoghurt line
and a diversified cheese category positions our dairy segment towards long term growth.
The continued growth of the soft alcohol market is reflected in the performance of the brewery business. Brewing capacity has been doubled
since acquisition in early 2011 and the expansion drive is on schedule to reach 400,000 hectolitres capacity in the near term to meet the rising
Recent acquisitions and investments have resulted in an increase in Group debt and a corresponding increase in the finance cost. Finance
costs increased by 136.9% during the period compared to last year and amounted to Rs. 608.8Mn. The average rate of interest payable by
the group has shown an increase of approximately 70% over the last twelve months whilst the quantum of bank borrowings at the end of the
period has almost doubled compared to 30th September 2011. The increased Borrowings of the group has been utilized to fund new
acquisitions and investments, to expand production facilities in the Soft-Alcohol and Dairy sectors and to invest in freehold property as per the
future expansion plans of the Group.
Higher interest costs and utility expenses have had a direct impact on the Group’s profit margins. This together with the macro-economic
implications of the 2013 budget on our retail segment requires the Group to take stock of its future investment and expansion plans. While the
growth of our core businesses would remain on course the Group would certainly review its risk appetite to ensure optimum and sustained
value creation for our shareholders and the communities we serve.
14 November 2012
Last edited by sriranga on Mon Nov 19, 2012 9:38 pm; edited 2 times in total