Pent-up demand boosts Ceylon Cold Stores 3Q

Ceylon Cold Stores PLC (CCS) tripled its profits in the quarter ended in September (2Q21) as robust consumer spending during the period lifted the company’s performance even beyond its pre-pandemic levels. 

Consumer spending in Sri Lanka and elsewhere in the world jumped no sooner the restrictions on people’s movement ended as consumers unleashed pent up demand providing a stronger lift to corporate earnings. 
CCS, Sri Lanka’s largest listed food and beverage entity, reported earnings of Rs.8.62 a share or Rs.819.4 million for the July-September quarter on revenues of Rs.18.4 billion. 

Both profits and revenues were up 195 percent and 13 percent respectively, from the year earlier period levels, the interim results filed by the company showed. 

The company in the June quarter reported a loss of Rs.349.9 million on a top line of Rs.12.4 billion, down by about 26 percent from the year earlier period.   

Analyst forecasts made last month expected the September quarter earnings to have turned a corner, driven largely by consumer demand.

“If the June quarter is anything of a representation of the factory recovery, then the September quarter is ought to be consumer recovery as the government had largely taken the virus under its control making the consumer to feel safer to step outside and open up their wallets,” an analyst said of the September earnings season. 

The company’s performance provides a strong proxy for the broader consumer sector and offers hints for how the overall economy had fared during the period, as authorities count on a stronger rebound in third quarter GDP.

Almost all economic readings on consumer spending and manufacturing for the three months till September showed that the economy was recovering from the pandemic-triggered downturn. But the ongoing restrictions starting from October could somewhat dampen the recovery, specially on the consumer side. 

CCS, which runs the country’s third largest supermarket chain under the ‘Keells’ brand largely recouped its lost sales during the pandemic during the quarter under review as the retail chain recorded revenues of Rs.14.3 billion compared to Rs.12.8 billion in the comparable period in 2019. Meanwhile, the company’s ‘Elephant House’ branded beverage and frozen confectionary manufacturing business reported revenues of Rs.4.2 billion for the three months compared to Rs.3.6 billion in the same period last year. John Keells Holdings PLC had 70.66 percent stake in Ceylon Cold Stores by end-September.