Ceylon Grain Elevators records profits despite challenging year for poultry industry
View(s):Ceylon Grain Elevators (CGE) Plc, the largest operator in the poultry market of Sri Lanka, experienced a challenging 2012 reflecting poor performance in the poultry industry in the country.
Group profits fell by a sharp 64 per cent from Rs. 419 million in 2011 to Rs.120 million in 2012.
Chairman and CEO of CGE Cehn Kwong in his annual review stressed rising raw material prices as a key issue, accompanied by unsteady supplies which served to increased unit production costs for the group. There were unprecedented price increases in key raw material utilized by CGE
The report also attributed the comparatively poor performance in the industry to the generally pessimistic global economic outlook. “The 2012 economy faced many headwinds including the Euro zone sovereign debt situation, US fiscal cliff and slowdown in fast-growing economies including China and these effects penetrated every industry,” the report noted.
The deceleration in Sri Lankan economic activity compared to 2011 as a result of inevitable global factors also added to GCE’s woes and reflected in the fall in profitability from the preceding year.
Looking to the future the chairman noted however that “GCE expects the poultry industry’s contribution to the economy to increase at a greater pace” and with future demand in mind CGE aims to capture a larger share of newly emerging markets”
Meanwhile Three Acre Farms (TAF) Plc, a subsidiary of GCE, also faced a turbulent 2012 with the company recording a profit of Rs. 36.9 million albeit a 78.4 per cent decline from the preceding year.
The poultry industry suffered as a result of an “unstable industry atmosphere” the annual report noted and although chicken meat prices rose during 2012 this was negated by marked increases in production costs which translated into fluctuating performance in both layer and broiler markets.
The industry also faced the after-effects of excess supply at the beginning of 2012 due to a high rate of hatcheries in 2011 and this ultimately depressed prices and worsened market prospects.
Yet the report also noted that the poultry industry did expand in 2012 adding that “TAF through improved efficiency will strive to maintain its position as a market leader in the industry.”
(SP)
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