Ceylon Cold Stores 2Q revenues soar as runaway inflation drives consumer spending on essentials

• Supermarket business reports robust revenues and profits on back of price increases  

Consumer foods juggernaut Ceylon Cold Stores PLC reported robust performance for the three months ended in September 2022 (2Q23) despite the substantial erosion in consumer spending amid runaway inflation and other economic difficulties.

The company, which is big in manufacturing and retailing of consumer food and other products, reported revenues of Rs.31.9 billion for the quarter, up 80 percent from the same period last year, on the back of the sharp increase in prices across all its products in response to the sharp increase in costs.

In late July, the company said it significantly increased penetration of its private label range with the dual intention of managing the inventory better and providing customers with alternative options and value for money, at a time when inflation has eroded their purchasing power.

The company may have also seen some volume increase in the quarter compared to the year earlier period of which more than half was beset by the virus-related restrictions on peoples’ movement.

The company’s manufacturing business generated revenues of Rs.7.2 billion in the quarter, nearly doubling from Rs.3.8 billion recorded in the same period last year.  Ceylon Cold Stores manufactures an expansive range of food and beverages under its Elephant House brand, ranging from carbonated soft drinks, plain and flavoured milk, fruit drinks, energy drinks, water to an array of frozen confectioneries.

Besides, the company also operates the country’s third largest supermarket chain under the Keells brand, with around 130 outlets. 

Its supermarket business generated sales of Rs.24.9 billion for the three months, compared to Rs.14.0 billion sales in the same quarter last year, as people were compelled to spend on their basic consumer needs, although they pulled back on almost all other spending requirements. 

At operating level, the company reported profits of Rs.1.52 billion, compared to Rs.254.3 million a year ago.   The company reported earnings of 46 cents a share or Rs.436.6 million for the quarter, compared to negative earnings of 8 cents or Rs.77.1 million in the same period last year.

Last year’s losses were caused by the losses stemming from its supermarket business as a result of the subdued sales, as virus-related restrictions put a damper on the economy.

The finance cost rose sharply to Rs.1.08 billion in the quarter from Rs.515.2 million a year ago on higher interest rates and short-term borrowings made by way of overdraft. 

John Keells Holdings PLC has a 70.66 percent stake in Ceylon Cold Stores.