Asset sale by associate boosts Cargills December earnings

Diversified conglomerate Cargills (Ceylon) PLC (CARG) posted a Rs.827 million net profit for the quarter ended December 31, 2017 (3Q18), recording a growth of 30 percent from the corresponding quarter last year, due to the gains from its associate, Cargills Bank, made on the sale of one of its subsidiaries.

CARG, which has interests in retail, dairy, food and beverage processing, real estate and finance, saw its earnings per share improving to Rs.3.69 from Rs.2.84 year-on-year (YoY). The CARG shares were last trading at Rs.208.

CARG revenue increased 5.3 percent YoY to Rs.23.2 billion during the festive season, while the cost of sales accelerated faster by 5.7 percent YoY to Rs.20.5 billion, resulting in a gross profit of Rs.2.7 billion, which was an increase of 2.2 percent YoY.

The operating profits eroded 1.8 percent YoY to Rs.1.4 billion over cost escalations in distribution and administration.

The share of profits incurred from associates increased to Rs.182.3 million from a loss of Rs.7.2 million, over Cargills Bank selling off its majority stake in Colombo Trust Finance PLC to Dialog Axiata PLC, in a Rs.481 million deal.

The group asset base, as at December 31, 2017, stood at Rs.52 billion compared to Rs.49.1 billion at the start of the financial year. The net assets per share during this period increased to Rs.73.68 from Rs.62.31. CARG had made a Rs.1 billion capital gain during the nine-month period by selling a property. The group borrowings meanwhile fell 15.6 percent YoY to Rs.13 billion. The nine-month period so far for CARG saw net profits increase 60.8 percent YoY to Rs.3.1 billion, owing to the sale of the property and increased income from associates from the sale of a subsidiary. Revenue for the nine months increased 7.1 percent YoY to Rs.68.7 billion, while the cost of sales increased 7.4 percent YoY to Rs.60.5 billion. Revenue from the retail segment, which opened its 338th store during the quarter, increased 7.4 percent YoY to Rs.54.8 billion, while the segment’s operating profits were flat YoY, at Rs.2.3 billion. The fast-moving consumer goods segment revenue increased 8.4 percent YoY to Rs.16.6 billion, while the operating profits increased 4 percent YoY to Rs.1.8 billion.

Revenue from the restaurants, KFC and TGIF, increased 14.3 percent YoY to Rs.2.8 billion, with operating profits of Rs.349.8 million, an increase of 67.6 percent YoY.

The Page family controls around 80 percent of the shares in CARG. The state controls 3.9 percent of the shares through the Employees’ Provident Fund and Bank of Ceylon.