CIC delivers solid 4Q; but fertilizer import ban could weigh on future earnings

CIC Holdings PLC delivered strong financial performance for the three months to March 2021 (4Q21) as its multiple interests in agriculture and dairy, livestock feed, industrial, pharmaceutical, and seeds & fertilizer were best served by the conditions created by the pandemic.

The group reported revenues of Rs. 9.1 billion for the three months under review, up by robust 34 percent year-on-year (YoY) as the country’s focus heavily tilted toward agriculture and local production while the pent-up demand propelled the group’s top line. 

The group’s livestock solution business saw increased demand for poultry feed from the strong recovery in demand for chicken and other poultry produce while its health and personal care business stood to benefit from pharmaceutical importation and production operations and the higher demand for its ‘Link’ branded herbal care products, which are looking to expand its global foot print. 

However, it remains uncertain how the most recent decision by the government to ban the importation of chemical fertilizer and other agro chemicals could affect the group’s momentum going forward as CIC is one of the largest chemical fertilizer importers and blenders, and that business still generates the largest amount of revenues and profits for the group. 

The group reported earnings of Rs.2.33 a share or Rs.884.78 million for the quarter under review, compared to a loss of Rs.19.33 million in the corresponding period last year. 

The bottom line was also supported by a tax reversal during the period as opposed to the corporate income tax charge in the corresponding period last year and a reversal in provisions made for possible losses on trade receivables, indicating that a section of company’s debtors, who were in default category settled part of their dues.
The group also paid down part of its debt on booming business incomes, which reduced its finance cost, further buttressing the bottom line. 

Meanwhile, for the full year ended March 31, 2021, the group reported earnings of Rs.8.26 a share or Rs.3.1 billion compared to earnings of Rs.2.20 a share or Rs.832.58 million last year. 

The group generated revenues of Rs.37.2 billion for the full year, logging 22 percent increase, of which crop solution business, which includes fertilizer and seeds, brought in Rs.12.7 billion, followed by Rs.9.1 billion by the livestock solutions division, Rs.8.5 billion by health and personal care division, Rs.3.9 billon from its industrial solutions division and Rs.3.2 billion by its agri produces division, 

which produces a range of dairy products under ‘Creamoo’ brand that is gaining traction.  By March 31, 2021 Paints & General Industries Limited controlled by the Captain family had 53.31 percent stake in CIC Holdings, while the Employees’ Provident Fund (EPF) had 9.06 percent being its second largest shareholder.  EPF also had 12.7 percent stake in the company’s non-voting shares being the largest shareholder.