Sri Lanka’s Ceylon Grain Elevators net up in December on tighter costs, lower tax bill

ECONOMYNEXT – Profits at Ceylon Grain Elevators, a Sri Lanka unit of Singapore based Prima group with interests in feed milling and poultry, grew 26 percent in the December 2019 quarter from a year earlier amid a lower tax bill, and the firm said stable exchange rates helped contain costs.

The group reported earnings of 5.07 rupees per share for the quarter. In the year to December 2019, Ceylon Grain Elevators reported earnings of 14.99 rupees per share, on total profits of 897 million rupees, which were marginally up from 886 million rupees.

Revenues grew 4 percent to 4,298 million rupees in the quarter, while costs fell 6 percent to 3,819 million rupees and gross profits grew 3 percent to 478.9 million rupees.

“Consistent feed quality, promotional activities, customer-centric product offerings, and good relationship with key customers helped in its revenue growth, against intense price competition, the glut in the chicken market and lower economic activities,” Executive Director and Chief Executive Officer Cheng Chih Kwong, Primus told shareholders.

“The performance of the Group had sustained during the year under review, as a result of continuous improvements in operational efficiency, rigid control over overheads and the more stabilised exchange rates.”

Sri Lanka’s soft-peg with the US dollar collapsed in 2018 from 153 to 182 to the US dollar amid liquidity injections from the central bank to enforce rate cuts,

In addition to the currency collapse the poultry industry, was also hit by a collapse in tourism in April, though arrivals had recovered to almost pre-crisis levels by December.

Three Acre Farms, the groups hatchery and poultry unit said demand for chicken was still weak, but the egg and export market for parent stock was strong.

Ceylon Grain Elevators group pre-tax profits were up 3 percent to 477 million rupees, but after tax profits grew 19 percent as income taxes fell 51 percent to 48.4 million rupees.

Sri Lanka’s new administration also cut income and value added taxes from January, which were not included in the December quarter. The taxes have not been passed in parliament.

“The amendments to the Inland Revenue Act No. 24 of 2017, which were published by the Department of Inland Revenue on 12 February 2020 are yet to be approved by the parliament,” the firm said.

“Since, these amendments are not substantively enacted at the end of the reporting period, the Group has adopted the tax rates prevailed as at 31 December 2019 in calculating taxes.

“The impact of the above amendments has not been quantified yet by the Group due to lack of statutory definitions.

But the chief executive said tax would benefit the industry.

“The proposed tax reforms in the country have been well received by the livestock industry and have improved consumer sentiments which will spillover in to the year ahead,” Primus said. (Colombo/Feb26/2020 – corrected opening paragraph)