CIC delivers robust 4Q but fertiliser biz hit by botched organic pivot

CIC Holdings PLC navigated a turbulent quarter to emerge strong for the quarter ended on March 31, 2022 (4Q22), given the defensive nature of its businesses but the persistent dollar crunch and the expected contraction in the economy could put some pressure on the diversified conglomerate to maintain the momentum in the current financial year. 

The group, which has interests in agri produce, livestock solutions, health and personal care, industrial solutions and crop solutions, reported revenues of Rs.11.8 billion for the January-March quarter, up 31 percent from the same period in 2021.

The group reported earnings of Rs.2.76 a share or Rs1.05 billion in the three months, up from Rs.2.33 a share or Rs.884.8 million in the year earlier period. 

The performance reflects the group’s resilience portrayed amid adversities in the macroeconomy, which engulfed the forgoing quarter. 

However, there was a sharp increase in the finance cost in the three months, reflecting the soaring interest rates. 
As a result, the finance cost jumped to Rs.1.67 billion in the three months, compared to Rs.267.5 million in the year earlier period, even without a substantial increase in the borrowings. 

For the full year ended on March 31, 2022, the group incurred a finance cost of Rs.2.38 billion, compared to Rs.1.14 billion. 

The rising interest rates are inflicting a massive burden on those companies, which borrowed heavily when the rates were at rock bottom levels in the last two years, as their facilities are getting repriced at a faster rate. 
For instance, the average weighted prime lending rate, where most of the corporate lending is linked to, rose by nearly 15 percent since the Central Bank pivoted to tighten the monetary policy in August last year. 

Meanwhile, for the full year, CIC reported earnings of Rs.9.72 a share or Rs.3.68 billion, compared to earnings of Rs.8.26 a share or Rs.3.13 billion. 

The full year revenues gained 12.2 percent to Rs.41.8 billion. 
CIC, being a major importer of fertiliser, faced some setbacks last year when the government banned chemical fertiliser imports before the policy was reversed in November in the face of farmer agitations and fears of a food shortage, which has now become a reality nearly a year later. 

This is reflected in the Rs.10.3 billion generated by the group’s crop solutions segment for the full year, which captures the fertiliser imports and manufacturing business, which came down from Rs.12.7 billion. Despite the decline in revenue, the operating profit rose slightly to Rs.2.48 billion, compared to Rs.2.19 billion a year ago.
The group welcomed the government’s change of stance on chemical fertiliser last year. 

Meanwhile, the other business segments of the group did well during the financial year at both top and bottom line levels, with the livestock division at the forefront, due to the hefty demand for poultry feed. 

The Employees’ Provident Fund has a 9.06 percent stake in the company’s voting shares, being its second largest shareholder and it has another 12.7 percent stake in non-voting shares, leading the shareholder list.