Sri Lanka’s Cargills brands bolster June quarter profits

ECONOMYNEXT – Sri Lanka’s Cargills (Ceylon) reported a net profit of 390.6 million rupees in the June 2015 quarter compared with a loss of 145 million rupees a year earlier with fast growth in branded products.

Earnings per share for the quarter were 1.74 rupees against a loss per share of 65 cents the previous year, a stock exchange filing said.

Group sales rose 9.0 percent to 17.1 billion rupees in the three months ended 30 June 2015 from a year ago.

Cargills Ceylon, part of the CT Holdings group, attributed revenue growth to the strong performance of its retail and Fast Moving Consumer Goods businesses.

“Improved consumer sentiment was evident from the beginning of the year,” the statement said.

“The FMCG sector has returned a stable performance with a 24.6 percent growth in turnover ending at 3.0 billion rupees.

“The double-digit growth reported by our agriculture and livestock processing businesses indicates category growth driven by our strong portfolio of national brands; ‘Kist’, ‘Goldi,’ ‘Sams’, ‘Magic’ and ‘Kotmale’.”

The group’s retail sector sales grew 5.7 percent to 13.4 billion rupees in the quarter.

But Cargills said the business “continued to be challenged by the ‘deemed’ Value-Added-Tax (VAT) imposed on VAT exempted products that are essential for daily nutrition and are sourced locally.

”Continuation of this arbitrary fiscal policy is contradictory to national efforts of encouraging local agriculture and production and has far reaching implications on smallholder farmers who have been empowered by the steady markets and guaranteed minimum prices benchmarked by the private supermarket industry.”

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The statement said the group restructuring process with efforts to optimize resources and expertise while strengthening the balance sheet has “yielded the expected results leading to enhanced efficiency.”

(Colombo/July 28 2015)
 

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