Cargills ends first quarter with steady performance while helping local production
5 months ago
Cargills (Ceylon) PLC announced its consolidated financial results for the six months that ended on 30 September 2022 which according to the group has been a “steady” performance in a challenging environment, particularly considering rising interest and raw material cost as well as increasing cost of operations. The group recorded a cumulative revenue of Rs. 97,181 million (66% YoY) for the first half of the year while revenue increased to Rs. 49,206 million (70% YoY) during the quarter under review. Group earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the first half of the year was Rs. 9,410 million (65% YoY) and Rs. 4,969 million (74% YoY) for the quarter under review. The group recorded an operating profit of Rs. 6,527 million (102% YoY) during the first half of the year while operating profits grew to Rs. 3,521 million (116% YoY) during the quarter under review. Profit after tax was Rs. 2,737 million (127% YoY) for the first half of the year and reached Rs. 1,186 million (69% YoY) for the quarter under review. The group’s performance was driven by all three major business segments of the group – retail, food manufacturing, and restaurants. In the retail sector, higher revenue and transactions were driven by offering availability in addition to the best prices and quality, which enabled the company to expand its market position. “The food manufacturing business recorded another strong quarter, despite challenges with raw material availability, fuel shortages, rising input costs, and the rising cost of factory operations. All categories recorded strong volume growth except the confectionery business where the price component led to sales growth. We have seen an increase in demand for our brands, although supply challenges have limited the ability to meet customer demand from time to time. Our team is currently working on building local production in order to ensure the group continues to serve the nutritional needs of our customers. “At a time when customers have been burdened with significant price increases, we have curtailed the passing of costs to the consumer. Selective price revisions have been made to minimise the impact on profitability, with careful consideration of affordability and nutrition. The group’s focus on local sourcing and established networks with the agricultural community for many decades have helped the business expand its market position during this challenging period. The restaurant business also recorded a remarkable performance, driven by its offering and careful price revisions to ensure affordability.” The group’s operations have grown despite the turbulent macroeconomic environment. The management is focused on driving the top line while investing in building its key resources such as talent. Strategic investments will be made to increase capacity and touchpoints across the country while the group works towards improving its cash flow position and managing debt amidst the high-interest rate environment. These strategic investments will be made to support the country’s objective of achieving food security while ensuring the investments yield the required returns, both in the near term and long term. As a large local food company, the group is committed to utilising its resources to ensure the nutritional needs of consumers across the country are met. It believes that local production can meet the basic food needs of Sri Lanka in the long term with the appropriate policies to encourage investment in food production. The group declared an interim dividend of Rs. 3.50 per share for the reporting period, which is higher than the Rs. 2.00 per share declared during the previous financial year.