Sri Lankan food retailer Cargills has released third quarter financial results which indicate significant year-on-year profitability for the three months and nine months to end-December 2010, stating; "All our existing businesses have performed exceedingly well and the expansion programme in Cargills Retail is on track."
At the same time, group net profit for the three months to end-December 2010 grew 53% year-on-year to Rs. 290.73 million, while the same line item for the nine months to end-December 2010 rose by 73% year-on-year to Rs. 855.00 million. Additionally, group turnover for the stipulated periods also showed double digit growth with the former being Rs. 9.86 billion and the latter at Rs. 27.45 billion.
According to chief executive Ranjit Page, who was quoted in its financials; "The period under review saw the group looking to further expand its businesses in line with its core business interests in retail and FMCG. Cargills is of the view that the anticipated high economic growth in the medium term and the consequent growth in per capita income provides vast opportunities for the FMCG business." A strategy already exceedingly demonstrated by the group's recent shopping spree which saw it pick up ice cream and dairy brand ‘Kotmale’ (Rs. 1 billion), biscuit maker ‘Diana’ (Rs. 352 million) and, most recent of all, an agreement to acquire several local beer brands, including ‘3 Coins’, ‘Sando Stout’, ‘Irish Dark’ and ‘Grand Blonde,’ for Rs. 1.42 billion.
Explaining away this slew of new acquisitions, Mr. Page indicated that they "envisage a consumer shift from hard liquor to soft alcohol and a rapidly growing demand from the tourism sector would see growth in this category of business... these brands [having] distribution channels including linkages with institutional customers provides a strong platform from which Millers Brewery should certainly develop into a strong player in the medium term."
He also revealed ‘branded consumer goods to be a thrust in its future expansion and diversification. The competitive advantage of being the leader in the modern trade industry through its Cargills Food City supermarket chain and its island-wide marketing and distribution subsidiary Millers Limited provides Cargills the opportunity to achieve the full potential of these newly acquired businesses.’