Cargills puts up robust 2Q show amid pent-up demand

The pent-up demand drove Cargills Ceylon PLC to peak sales during the three months to September (2Q21), as the group more than recouped the lost sales during the pandemic-hit previous quarter to eclipse its last year’s performance. 

The retail juggernaut, with over 400 stores around the country, reported sales of Rs.29.1 billion for the July-September quarter, a 16 percent jump from the same period, last year, as people visited stores and filled their shopping carts freely, after being in confinement for most of the period in the earlier quarter, hampered by the pandemic-related restrictions. 

The group also reported a 31 percent increase in its operating profits to Rs.1.92 billion, from the comparable period in 2019, amid renewed focus on cost management, adding a further tailwind to the profits. 

The group reported earnings of Rs.2.78 a share or Rs.764.2 million for the quarter, compared to Rs.1.88 a share or 497.1 million in the year earlier period, logging a 54 
percent increase. 

Analysts largely regarded the September quarter as a recovery quarter, with the previous June quarter getting decimated by a two-month lockdown that compelled businesses to close shop and consumers to 
stay indoors.

This clearly reflected in Cargills’ results as all of its three key business segments of the group—retail, fast-moving consumer goods and restaurants—performed at pre-pandemic levels. 

Its retail business generated revenues of Rs.22.3 billion during the three months, compared to Rs.19.3 billion, reflecting both higher footfall and filled carts.

The group’s FMCG business generated revenues of Rs.5.8 billion, compared to Rs.4.7 billion in the year earlier period, as demand for its dairy and confectionary food items increased. 

Its restaurants business, represented by its KFC and TGI Friday’s franchises, recorded revenues of Rs.1.0 billion, unchanged from a year earlier levels, in an indications that people patronised these places heavily after the lockdowns. 

KFC operates 40 restaurants, comprising of dine-in, take away and delivery channels. 

Cargills Ceylon promoters, C T Holdings PLC has a 69.87 percent stake in the company while the Employees’ Provident Fund holds a 3.27 percent stake, being its third largest shareholder. 

In June this year, the International Finance Corporation, the private sector investment arm of the World Bank, decided to exit from its investment made in 2015 in Cargills Foods Company (Private) Limited, via a put option. 
As a result, the group subscribed for 4,130,424 shares of Cargills Foods Company (Private) Limited, representing an 8 percent stake of the company, for an amount of 
Rs.3.8 billion.