Ceylon Cold Stores June results highlight strengthening consumer market

Offering a sneak peek view of the consumer markets in the foregoing quarter, Ceylon Cold Stores PLC reported better top and bottom lines, which showed signs of continued recovery in consumer spending.

The John Keells Holdings subsidiary reported a top line of Rs.38.1 billion in the April-June quarter, the company’s first fiscal quarter (1Q25), up 10 percent from the same period in 2023.

The operating profits however surged by 69 percent to Rs.2.33 billion.

The group’s manufacturing segment, which produces Elephant House-branded frozen confectioneries, beverages, dairy products and others, reported revenues of Rs.8.42 billion for the quarter, up 14.6 percent from the same period in 2023.

This reflects that the consumer is gradually returning to consumer discretionary items, which they for a long period stayed away from, due to the runaway inflation and also the sky-high interest rates, which effectively killed the demand for things other than for the staples.

Meanwhile, the group’s retail business, represented by the Keells Super supermarkets, also showed strengthening results, with the quarter registering a revenue of Rs.30.52 billion, which translated into an 8.4 percent growth from the same period a year ago.

The earnings of the two segments rose by at least three folds.

The company, at a consolidated level, reported earnings of Rs.1.24 a share or Rs.1.17 billion for the quarter, compared to Rs.0.34 a share or Rs.322.17 million in the year earlier period.

The top and bottom-line performances are a reflection of a clear turnaround in the company’s performance across its two key business segments.

Meanwhile, the net finance cost also fell sharply by 38 percent to Rs.596.4 million in the quarter, partly as a result of the decline in the borrowings and also due to the softening interest rates.  

Ceylon Cold Stores to a larger extent offers clues about the Sri Lankan consumer, as he is gradually picking up from the distressed conditions in the last two years.

The company’s higher top line shows that the consumer is loosening his purse strings while the expanding bottom line shows the company is benefitting from the cooler inflation and lower borrowing costs, in addition to its own efficiency enhancing measures.

The company’s share ended unchanged at Rs.56.10 yesterday. The company declared a first interim dividend of 73 cents.

John Keells Holdings PLC owns a 70.66 percent stake in Ceylon Cold Stores.