CIC Holdings records strong second quarter performance

CIC Holdings PLC maintained the momentum it gained during the pandemic, as the diversified conglomerate delivered strong revenues and profits across its multiple business units in the three months ended in September 2021 (2Q22). 

The group which has interests in agri produce, livestock solutions, health and personal care, industrial solutions and crop solutions generated revenues of Rs.9.54 billion for the quarter under review compared to Rs.9.13 billion in the same period in 2020, up by 4.5 percent.  

The cost of sales rose by a restrained 2.45 percent year-on-year (YoY) to 
Rs.6.96 billion. 

As the September quarter earnings season is getting underway, investors and others are looking at in particular among other things to what extent the rising costs dented their margins and thereby the profits as soaring global commodities prices, supply chain bottlenecks and weaker rupee became the biggest concerns in markets in the foregoing quarter. 

While most of the price increases were passed down to the end consumer, at least part of the cost was borne by the producers absorbing it through their margins. 

At CIC Holdings gross profit rose by 10.4 percent YoY to Rs.2.58 billion, while the operating profits rose by robust 19.8 percent to Rs.1.45 billion in a sign that the group had navigated the supply chain and cost issues quite successfully during the September quarter.  

The group’s crop solutions business under which its fertiliser business is listed, recorded revenues of Rs.5.26 billion in the six months to September 2021, as separate data for the quarter wasn’t given. This is a slight decline from the Rs.5.59 billion recorded in the same period in 2020. 

However, this segment reported an operating profit of Rs.1.09 billion in the six months under review, slightly up from Rs.1.06 billion in the same period last year. 

CIC Holdings is one of the largest fertiliser importers and manufacturers, but since the government’s pivot to organic fertiliser from chemical fertiliser from May onwards prompted the company to ramp up its organic fertiliser production. 

Meanwhile, all other segments of the group generated higher revenues and better operating profits in the six months to September 2021 from the corresponding period last year with its livestock solutions standing out.
According to reports, Sri Lanka is facing rising egg prices as  poultry farmers find it extremely difficult to find feed and other feed ingredients which are in short supply and their prices have also gone up substantially due to the import duties on maize and licensing system which had made a fertile ground for rent seeking political cronies.  

The surge in demand for eggs since re-opening the country in October has made a significant gap between supply and demand, causing the current bout of rising prices, a condition of which is expected to continue through the December festive season, further escalating prices. 

CIC Holdings reported earnings of Rs.7.93 a share or Rs.751.4 million in the quarter under review compared to Rs.7.60 a share or Rs.719.9 million in the year earlier period as financial cost rose substantially between the two periods. 

By September 30, 2021, Paints & General Industries Limited had 53.31 percent stake in CIC Holdings while the Employees’ Provident Fund (EPF) had 9.06 percent being its second largest shareholder. 

Employees’ Provident Fund had 12.7 percent stake in the company’s non-voting shares being the largest shareholder.