Defensive nature of most biz lines propels CIC first quarter

If there were only handful of businesses, which could so successfully weather the economic destruction inflicted by the pandemic and emerge even stronger, CIC Holdings is certainly one of them as the health crisis and the circumstances that followed helped the company to deliver better performance.  

The essential nature of its agricultural produce, crop solutions and livestock solutions businesses and the defensive nature of its health and personal care business shielded the group from the mostly negative implications that came from the pandemic, which hurt many businesses in many sectors. 

As the government decided to lockdown the country from mid-March, agriculture and healthcare sectors were designated as essential while the agriculture sector was given a massive support with State patronage as the country ratcheted up farming and cultivation to minimise the effects from prolonged disruptions to global food supply chains. Export agricultural crops were also given a massive promotion to earn foreign exchange. 

CIC Holdings PLC reported 18 percent higher revenue or Rs.7.88 billion during its fiscal first quarter ended June 30, 2020 from the comparable quarter of last year, supported by its business segments connected to crop solutions, livestock and health and personal care. 

The industrial solutions business, the line of business exposed to industrial production activity that moves in tandem with the recovery of the manufacturing, was the only segment which lagged behind. The crop solutions segment brought revenues of Rs.2.86 billion during the three months compared to Rs.1.99 billion in the year earlier period while the agricultural produce segment generated revenues of Rs.684 million, slightly down from Rs.743 million in the year ago period. 

The livestock solutions business generated revenues of Rs.1.80 billion compared to Rs.1.47 billion in the comparable period of last year. 

Meanwhile, the health and personal care segment generated revenues of Rs.1.94 billion compared to Rs.1.71 billion a year ago.  CIC’s industrial solutions business, the smallest of the five recorded revenues of Rs.649 million compared to Rs.934 million in the period a year ago. 

The company reported earnings of Rs.4.02 a share or Rs.380.82 million for the April-June quarter compared to Rs.1.11 a share or Rs.105.22 million in the same period last year. The finance costs also declined by nearly Rs.100 million. 

The performance of the company also demonstrates that CIC appeared to have found the right balance and the correct mix of its business portfolio after its re-setting exercise embarked on about three years ago. 

Its business verticals are mostly defensive in nature as agriculture and health and personal care mostly stand the test of time with some short term volatility expected in agriculture contingent on weather conditions. 

As at June 30, 2020, Paints & General Industries Limited had 53.31 percent stake in CIC Holdings while the Employees’ Provident Fund had 9.06 percent being its second largest shareholder. 

Employees’ Provident Fund had 12.7 percent stake in the company’s non-voting shares being the largest shareholder.