ECONOMYNEXT – Sri Lanka’s Ceylon Grain Elevators, a feed milling firm and poultry processing group saw profits fall 12 percent in the December quarter to 366 million rupees, amid a higher tax charge despite better margins at the core feed milling unit after getting a maize import permit.
The company reported earnings of 6.10 rupees a share in the quarter. In the year to end December 2017, it reported earnings of 13.17 rupees a share on a total profit of 790 million rupees, down 40.7 percent from a year ago, interim accounts filed with the stock exchange showed.
The share was at 70 rupees, up four rupees in early trade Wednesday.
Group profits were down partly due to a 152 million income charge for the quarter, against a tax reversal a year ago.
"Performance was curtailed by the shortage of raw materials due to adverse weather and unavailability of an import permit for maize," the company told shareholders in interim accounts filed with the Colombo Stock Exchange.
"However, the group was able to recover from the challenging situation to a certain extent in the December 2017 quarter when it managed to obtain a permit to import maize."
At the standalone company, revenues grew 3.3 percent to 3.6 billion rupees, costs rose 1.7 percent to 3.36 billion rupees but gross profits grew 23.9 percent to 323 million rupees.
Sri Lanka’s past practice of issuing import permits to third party suppliers, had come under fire as promoting corruption and rentseeking.
Sri Lanka also charges import duties for maize, in a bid to protect farmers and a group suppliers with political connections, critics have said. <> In August 2017, Ceylon Grain Elevators said it appealed to the government to be allowed to import its maize requirement directly as third party suppliers charged high prices.
Depressed market conditions for poultry affected the selling price of chicken and layer day old chicks, it said.
Group Revenue, which includes poultry processing at subsidiary Three Acre Farms, in the December quarter grew two percent to 3.8 billion rupees, and cost of sales increased three percent to 3.2 billion rupees shrinking gross profits by two percent to 538.8 million rupees.
Selling and distribution expenses fell 50 percent to 25.2 million rupees and administrative expenses decreased by 33 percent to 48 million rupees.
At Three Acre Farms, which has broiler farms, reported a profit of 192.2 million rupees for the December 2017 quarter, down 31 percent from a year ago.
The company reported earnings of 8.16 rupees per share. In the year ending December 2017, Three Acre Farms reported earnings of 27.7 rupees a share on a total profit of 653.8 million rupees, down 19 percent from a year ago.
Revenue fell six percent to 2.4 billion rupees mostly due to depressed demand for eggs, the company said.
Cost of sales increased eight percent during the year to 1.7 billion rupees, contracting gross profit by 27% to 709.8 million rupees.
A Three Acre Farms share was trading at 113.90 rupees, up 4.10 rupees in early trading Wednesday. (COLOMBO, February 07, 2018)