Ceylon Cold Stores concludes a stronger March quarter

• E-commerce kept retail business largely intact during curfews

Ceylon Cold Stores PLC (CCS) reported strong top and bottom line performance for the three months to March 2020, with increased consumer spending amid tax cuts and lower interest rates.

Although the activities came to a near standstill with curfew being imposed from March 20, in a bid to constrain the spread of COVID-19, the group’s retail operations continued leveraging on its e-commerce platform. 

“The beverages and frozen confectionary businesses have commenced sales through their distributors as well as through online platforms,” CCS said.

However, CCS, the country’s largest food and beverage company, said its group operations, which contain the manufacturing of beverages and frozen confectionary and the operations of its ‘Keells’ supermarket chain, are still operating at “reduced scale”.  

The group had to suspend its manufacturing operations on March 20, complying with the state-mandated curfew orders.

The group increased revenues by 17 percent to Rs.18.1 billion for the January-March 2020 quarter, from the same period a year ago with gross profit increasing by 25 percent to Rs.2.2 billion. 

During the period, retail sales rose from Rs.11.6 billion to Rs.14.3 billion, an increase of 23.3 percent over the previous year. 

The strong retail sales are a classic indicator of the positive consumer sentiment that prevailed. 

The group’s performance is also a strong proxy for the food and beverage sector in the economy and the March results pointed to a strong upward trajectory before being bogged down by the pandemic.

Meanwhile, the group’s retail operations saw its operating profits nearly doubling to Rs.789.6 million, from Rs.396.8 million in the year earlier period, a clear indication of its higher same store sales and new stores rapidly gaining in sales.

Keells attracts shoppers due to its convenient locations, wider choice and spacious parking space available at almost every location.   

Meanwhile, the group’s manufacturing business recorded sales of Rs.3.95 billion, matching the figure at the year earlier level. 

The maker of Elephant House-branded soft drinks and ice creams and more recently into dairy products could have surpassed the year earlier sales, if it was allowed to operate the balance two weeks of March. 

Since then, the company has resumed its manufacturing with the gradual easing of restrictions. 

“The group is also closely monitoring the liquidity positions and has been serving the existing debt requirements while managing the working capital requirements. Production plants have commenced operations, which was temporarily suspended on March 20, 2020,” CCS said. 

The group reported earnings of Rs.9.22 a share or Rs.876 million for the three months ended March 2020, compared to Rs.5.56 a share or Rs.528.4 million in the year earlier period. 

For the full-year ended on March 31, CCS reported earnings of Rs.22.47 a share or Rs.2.1 billion on sales of Rs.69.1 billion, compared to earnings of Rs.13.79 a share or Rs.1.3 billion in the previous year, on sales of Rs.59.1 billion. 

John Keells Holdings PLC has a 70.66 percent stake in CCS.