CIC Holdings reports subdued profits in June as higher costs take toll

CIC Holdings PLC reported higher revenues but the surging costs weighed heavily on the profits of the diversified conglomerate, which operates with business segments that for long fortified the company from even the unprecedented challenges seen over the recent past. 
The group reported revenues of Rs.17.07 billion in the three months to June 30, 2023 (1Q24), up 11.5 percent from the same period last year. 

But the direct costs surged by 46.2 percent to Rs.12.4 billion in the same period a year ago, shaving off the gross profit to Rs.4.6 billion, from Rs.6.8 billion, a 31.9 percent slump. 
The group has established a strong position in the country’s agricultural sector through its involvement in manufacturing and importation of fertiliser, other agricultural produce and livestock. 

Due to its significant role as a major supplier of chemical fertiliser for the government’s subsidy scheme, the group was well-prepared to leverage the opportunity presented by the country’s impending food shortage last year, which was caused by a scarcity of foreign currency.
The group also has interests in the industrial solutions and health and personal care sectors. 

While its crop solutions segment, which houses the fertiliser business, generated a revenue of Rs.6.87 billion for the quarter under review, higher than Rs.5.15 billion a year earlier, the health and personal care segment generated a revenue of Rs.3.66 billion, up more than a billion rupees, from Rs.2.60 billion in the same period last year.  However, the other three major segments – agri produce, livestock and industrial solutions – slipped from last year’s level. 

All segments, with the exception of health and personal care, did poorly at operating profit level, explaining the extent to which the escalation in costs across the group has affected the profitability of its major business units.  

The group reported earnings of Rs.518.73 million or Rs.1.37 a share for the April-June quarter, compared to earnings of Rs.5.58 a share or Rs.2.1 billion in the same period last year, when the economic crisis and resulting food scarcity took a massive toll on the country.
Captain family-controlled Paints & General Industries Limited has a 53.31 percent stake in CIC, while the Employees’ Provident Fund holds 9.06 percent, being the company’s second largest voting shareholder.