As a leading player in the consumer goods industry, Cargills (Ceylon) PLC  is hopeful that the state, under new political direction, will invest in more agricultural import substitution strategies in order to further support domestic production. Nonetheless, the Group will continue to focus on building brands, growing markets and market share as the company strive to enhance their contribution towards the local economy and making Sri Lanka a self-sufficient nation.

Cargills (Ceylon) PLC  stated that the market conditions this past quarter have been favorable, with consumer confidence moving past the April Easter Sunday attack.

“Following the conclusion of the presidential elections, favorable fiscal policies in terms of tax savings aimed at boosting consumption were introduced. The Group endeavors on passing on the benefits to our consumers. Due to these benefits accrued via the tax savings, the core businesses of Cargills delivered strong performances at industry-best growth levels,” the company said in its latest interim financial statement for the period ending 31st December 2019.

During the nine months ended 31st December 2019, the Group’s revenue was recorded at Rs. 78,908 Mn at a growth rate of 10.84% YoY. Moreover, robust growth was achieved in the Group’s operating profit (35.76% YoY to Rs. 4,957 Mn) in conjunction with steady growth in profit after tax (7.59% YoY to Rs. 1,705 Mn).

Net finance costs have grown 89.01% YoY to Rs. 1,961 Mn which is mainly attributable to the adoption of SLFRS 16 - Leases in the preparation of the financial statements during the current financial year.

While Group’s operating segments performed positively, the FMCG sector was the key driving force yet again recording a top-line of Rs. 14,399 Mn at a growth rate of 16.94% YoY plus, an operating profit growth rate of 22.22% YoY to Rs. 2,374 Mn. Rising consumer demand, matched by category expansion in the Cheese and Butter categories and better marketing strategies, led to Dairy being the strongest performing FMCG segment. Furthermore, partnering with the government schools’ milk programme increased consumption of the sector’s UHT milk categories as well. The sector’s Ice Cream sales also recorded strong numbers. This sustained surge of the FMCG sector enables the Group to further grow the categories through innovation and sustainability.

Meanwhile the retail revenue In the nine months under review, Retail grew by 9.51% YoY to Rs. 61,376 Mn and operating profit margins by 65.96% YoY to Rs. 1,954 Mn. With the Retail footprint broadening to 402 outlets at the close of December, transaction volumes averaging nearly 8Mn per month, and rising footfall due to the gradual regrowth in consumer confidence, the Retail sector has been performing well this period. In this quarter, same-store sales have risen by 10.7% YoY, with same-store transactions growing 8.4% YoY. During the nine months under review, same-store sales reported a 2.8% growth vis-a-vis the previous financial year.

The Restaurant sector has also recovered during this period with revenue growing at 10.60% YoY to Rs. 3,192 Mn and operating profit at 16.03% YoY to Rs. 346 Mn. Consumption has been favourable this past nine months, partly due to the KFCfranchise extending to 40 outlets islandwide, and the relocation of the TGIF establishment (which is buffed by the popularity of the One Galle Face mall).

Cargills Bank’s performance in this period has been below par. Nonetheless, there was a growth in the loan portfolio with an increase in the issuance of payment cards. Furthermore, with the refinement of the business model, the Bank’s management is confident that future engagement with the Cargill’s ecosystem will result in better performance.