Colombo Fort Land plans aggressive cost cuts to make profits

The Colombo Fort Land & Building Company PLC (CFLB), which controls a diversified range of business interests, said that it would be cutting costs and in extreme cases divesting subsidiaries, in order to overcome the deteriorating climatic conditions and increased tax burdens.

“The group will undertake an aggressive strategy of cost reductions to ensure that we can return to profitability as soon as possible. Where businesses are continuously running at losses, steps will be taken to either rationalise their operations or to dispose of them,” CFLB Chairman A. Rajaratnam said.
CFLB has major operations in agriculture, chemicals, pharmaceuticals, leisure, fast-moving consumer goods (FMCG), industrial products, property development and has other diversified interests as well.

Addressing the CFLB shareholders in the firm’s annual report, Rajaratnam said that agriculture and agriculture-related businesses of the group faced challenges due to failure of both monsoons last year and the year ahead would not be either as well.

“The outlook for the year ahead remains weak. The dry climatic conditions are likely to continue, as are extreme weather conditions of flash floods and high temperatures,” he said.

Rajaratnam added that increased indirect taxation would also result in a slowdown in the FMCG segment.

Although the CFLB group revenue increased to Rs.41.02 billion in the FY16/17 financial year compared to Rs.36.86 billion year-on-year (YoY), the company recorded a Rs.1.08 billion net loss, deteriorating from a Rs.680.22 million in net loss YoY.

“The adverse climatic conditions that the group has had to face during this financial year contributed significantly to the increased losses that have been incurred,” Rajaratnam said.