RICH 31.12.2011

http://www.cse.lk/cmt/upload_report_file/509_1329217823374.pdf

The Richard Pieris Group ended its first nine months with a strong growth of 95% in Operating Profits of all its sectors other than the plantation sector.

The nine months ended 31 December 2011 evidenced a steady growth of the Group’s Retail, Plastic and Rubber Sectors and the Group is well poised to achieve its targets during the year with plans underway for an aggressive expansion of its large format super market retail outlets and diversification plans into the financial services sector.

The Group recorded a Turnover of Rs. 8.6 billion and an Operating Profit of Rs. 1 billion for the three months ended 31 December 2011. The Turnover for the nine months ended December 2011 was Rs. 23.5 billion resulting in a Group Operating

Profit of Rs. 2.8 billion and a Profit before Tax of Rs. 2.3 billion.

During the last 12 months Group Debt levels were around Rs. 4.4 billion and despite significant new investment the Group has managed its Debt levels without a significant increase and the overall Gearing Ratio which has reduced from 40% to 32% during this period and as at 31 December 2011 the Group Debt was Rs. 3.6 billion.

The Retail Sector continued its steady performance with a turnover of Rs. 10.4 billion and an operating profit of Rs.1.2 billion during the nine months ended 31 December 2011.

The turnover of this segment grew by 30% when compared to the previous year with an increase of 90% in the Operating Profit which includes a part of the Capital Gain resulting from the Richard Pieris Distributor’s investment in (Group’s disposal of its associate undertaking) – Asian Alliance Insurance PLC. During the period under review the sector opened yet another large format retail outlet in the town of Kalutara and two showrooms and is aggressively expanding its operations. The festive season was very busy for the retail sector with many promotional activities carried out which were immensely popular with our patrons.

The plastics sector recorded a Turnover of Rs. 3.6 billion and an Operating Profit of Rs. 461 million for the nine months ended 31 December 2011. The Turnover was 29% higher than the corresponding period of the previous year and the Operating Profit increased by 34% compared to last year.

During the quarter the sector ventured into a new line of business with the commencement of manufacture and distribution of furniture to the domestic market with a focus on domestic and office furniture. A new plant was set up for this purpose in Morentuduwa. Further market penetration was successfully carried out in water tank and mattress sales.

The Group’s Plantation Sector comprises three publicly quoted companies namely Kegalle Plantations, Namunukula Plantations and Maskeliya Plantations. Maskeliya Plantations continued to incur losses and the reported loss after tax for the period under review amounted to Rs. 536 million, mainly due to high wages and gratuity provision.

A considerable increase in Tea price was not achieved although the wages have significantly increased and had a drastic impact in the profitability of tea plantations. The global economic recession had an adverse impact on rubber prices which affected Revenue of both Kegalle and Namunukula Plantations. Overall the Plantations Sector managed to report an Operating Profit of Rs.540m mainly due to the profitability of Kegalle/Namunukula Plantations and the sector performance declined by 60% which had a significant impact on overall group profitability.

The Tyre Sector recorded a turnover of Rs. 2.1 billion, a growth of 12% and an Operating Profit of Rs. 220 million during the nine months ended 31 December 2011 which reflected a 12% increase when compared to reported results of 2010.

During the period under review a new Brand of tyres “Blue line” was introduced to the price conscious consumer. The volumes and market share of the Tyre Sector continued to increase which augurs well for the future.

The rubber manufacturing sector which includes the export of rubber products reported a turnover of Rs. 1.9 billion and an Operating Profit of Rs. 99 million during the nine months ended 31 December 2011. The turnover of this segment has reported a growth of 14% whereas the Operating Profits have more than doubled when compared with the corresponding period of the previous year.

During the last quarter several improvements were made in the manufacturing lines which have yielded savings. Penetration into new markets continued and Richard Pieris Exports made its 1st shipment to Australia during the period under review.

The performance of Richard Pieris Natural Foams was boost by high prices which is an indicator of better times ahead.

Richard Pieris Group which boasts of a solid business base in SriLanka continues to capitalise on opportunities created with the recovery of the Sri Lankan economy.

The Group’s key sectors of Retail, Tyre and Plastics are expected to further improve performance. In the retail arena aggressive expansion plans are underway for the Group to further expand its retail space and turnover.

Plantations sector is geared to perform better after the set back faced earlier during the financial year and opportunities for expansion both in Sri Lanka and overseas is being pursued. The Tyre sector continues to increase its volumes and market share and although the high rubber prices affected its margins the Sector is well focused to look forward to yet another successful year. Emphasis is also placed on overhead, working capital, cash flow management and to reduce borrowings further.

The Group is making steady progress in its venture in to the financial services sector. It entered the insurance industry with its own identity with the exit from its investment in Asian Alliance Insurance Company PLC where the Group reported a Capital Gain of Rs.717m. Commercial Operations of Arpico Insurance Limited commenced in January 2012. The period under review also saw the commencement of business operations of RPC Financial Services (Pvt) Limited which focuses on Margin Trading Activities and is an ideal extension to the Group’s stock broking firm “Richard Pieris Securities (Pvt) Limited” which was established last year. Further avenues of expansion into financial services are being aggressively evaluated as the Group prepares to celebrate its 80th Anniversary in few months time.

A spokesman for the company stated that the outlook for the last quarter of the financial year is very promising.
http://www.ft.lk/2012/02/16/rpc-posts-strong-results-for-9-months/