Restaurant business challenging but exiting the soft alcohol business pays off, says Cargills
View(s):The Cargills (Ceylon) Plc this week reported a loss of Rs 196.4 million for the six months ended September 30, 2014, compared to a profit of Rs 175.6 million in the same period last year.
The results of the current period include a charge of Rs 101 million being the impact of taxation pertaining to the transfer of fixed assets to Cargills Foods Company (Pvt) Ltd (CFC) which carries out the retail operations of the group.
The group completed the disposal of Millers Brewery Ltd (MBL) (to the Lion Brewery owners) for a consideration of Rs 5.15 billion. The proceeds from the above transactions are being utilzed to strengthen the group’s balance sheet, the company said in the results posted on the Colombo Stock Exchange website.
The group continued to see a volume growth in the second quarter of the financial year, resulting in a revenue growth of 10.3 per cent compared to last year, with revenue of Rs. 31.9 billion. Revenue growth largely came from the retail sector, while FMCG growth was marginal on account of the closure of the brewery business in June 2014 in preparation for disposal.
Operating profit of the retail business was down 45.1 per cent year-on-year to Rs. 54.4 million on account of the impact from ‘deemed’ VAT, as a result of the mix of VAT liable.
Cargills said it continues the Restructure and Consolidation process with a long term view to unlock value. The FMCG sector recorded an operating profit of Rs 22.9 million more than doubling profitability from the same period last year. This is due to the strong performance of the dairy segment while the exit from the soft alcohol industry is also bolstering segment profit. Meanwhile the Kist and Meat processing businesses remain on target in terms of both revenue and profitability targets, it said.