CIC finds sweet spot as group re-setting exercise bears fruit

CIC Holdings PLC gained ground during the period ended December 31, 2019 (3Q20), as the group, which specializes in agriculture and crop solutions pulled off some better performance across all its main business verticals while receiving a windfall from lower finance cost. 

CIC Holdings recorded a top line of Rs.9.2 billion for the three months under review, little changed from a year earlier, but the before-tax profit more than doubled to Rs.775 million from Rs.329 million in the year earlier period. 

The profits were partly supported by lower finance cost, which came down to Rs.403 million from Rs.662 million in the year earlier period.  CIC is currently in its third year or the final stage of its group re-strategizing exercise, which streamlined its multiple businesses under five core business clusters—crop solutions, agri produce, livestock solutions, health & personal care and industry solutions. Despite some hiccups at the initial stages of its resetting exercises, the group appears to have found its optimal portfolio mix, barring unforeseen impact from vagaries of the external environment.  The group reported earnings of Rs.5.53 a share on total profits of Rs.524.5 million for the quarter under review compared to earnings of Rs.1.56 a share or Rs.147.9 million reported for the corresponding three months of the previous year. 

The performance of the group was hit by the sharp fall in rupee and the political uncertainty caused by the constitutional crisis which put a strain on the group’s medical devices segment amidst delays in evaluation of tender proposals submitted for the supply of medical devices to government hospitals.  Meanwhile for the 9 months ended December 31, CIC reported earnings of Rs.8.99 a share or Rs.851.8 million compared to earnings of Rs.1.88 a share or Rs.178.4 million in the same period, a year ago. 

There was a substantial reduction in the finance cost from Rs.1.72 billion to Rs.1.29 billion.  Overheads were also seen contained to a greater extent. 

The revenues for the nine months were Rs.23.8 billion, a slight slippage from Rs.24.1 billion in the similar period of the previous year. 

The group last year abandoned a merger of its health and personal care business with Sunshine Holdings PLC’s healthcare arm which operates Healthguard retail chain. 

CIC, which grew mostly organically over five decades is now poised for mergers and acquisitions to accelerate its growth.

The health and personal care segment reported an operating profit of Rs.652 million compared to Rs.475.8 million in the year earlier period. 

Paints & General Industries Limited has 53.31 percent stake in CIC Holdings while the Employees’ Provident Fund has 9.06 percent being its second largest shareholder. 

EPF also has 12.7 percent stake in the company’s non-voting shares, being the largest shareholder.