Richard Pieris’ profits decline due to plantation sector issues
View(s):The Richard Pieris Group’s first nine month reported profits were adversely affected mainly due to the plantation sector which saw an increase in wages, reduction of rubber prices and adverse weather conditions in the upcountry, a company media release said.
Richard Pieris recorded group revenue of Rs. 25.9 billion and group operating profit of Rs. 2 billion. The turnover was similar to that of the previous period but the profitability was affected due to the VAT of 12.5 per cent on the retail sector, the release added, noting that the company continued to focus heavily on managing overheads and inventory. “The third quarter was the busiest period in the year for Retail with the seasonal peak in business in December 2013 as well as the opening of its 15th supercenter in Matara,” it said.
The Plastic and Distribution sector was adversely affected due to difficulties faced by the dealers especially in outstations, it said, adding that this sector did well to hold forth its operating profits which reported only a marginal decline when compared to the previous year.
Each of the Sector’s Strategic Business Units continued to search for market opportunities and many initiatives were undertaken during the year.
“Aggressive dealer promotions were carried out to ensure that the edge over the competitors is maintained,” the release said, adding that these marketing strategies are expected to deliver positive results in the fourth quarter. The sector focused on reducing overheads to enhance profitability levels, and focused on minimum working capital investments to optimize cost.
During the period under review the tyre sector of the group reported an increase in profits when compared with the results of the previous year, where the sector continued to benefit from low material prices. Several process improvements were also carried out during the quarter which helped to improve the overall profitability.
The exports sector performed best out of all the group companies recording exports of Rs. 2.1 billion during the period. Exports were increased to USA, Europe as well as new markets which were sourced during the period which portrays the growth for the future. This sector continued its success from the first six months to the second half of the year with overall growth in profitability. “Cost saving initiatives continued and the effective implementation of the biomass boiler contributed towards saving of energy to the latex foam business. Richard Pieris Exports also developed several new products which we produced to the European and US markets,” the release added.
It said that the group continues to focus on its core sectors and will utilize the local and global opportunities to expand its business planned expansions in its retail operations.