Richard Pieris plantation revenues flat
View(s):The plantation sector at Richard Pieris Group comprising three regional plantation companies saw its revenue being flat year on year (YOY) Rs. 1882.5 million in 1QFY16 mainly on the back of continuous hostile conditions in the plantation industry, analysts say.
Namunukula Plantations with a topline dip of 18 per cent YoY to Rs. 486.6 million saw improved performance in the oil palm segment relative to its other segments, a Softlogic Stockbrokers report has said. It said that the revenue of upcountry tea plantation, Maskeliya dipped by 6 per cent YoY to Rs. 921.8 million n 1QFY16 whilst Kegalle Plantations topline also declined by YoY to Rs. 555.4 million during the quarter under consideration.
The operating profits of the plantation sector declined by 114 per cent YoY to record an operating loss of Rs. 22.4 million in 1QFY 16. “Low commodity prices along with demand conditions in the global platform together with adverse weather patterns and low production volumes caused the sector to report a poor performance during the period,” the report said, adding that the downward trend of rubber prices together with the wage hike in the overall sector which comes into effect once in two years has intensified pressure on the sector bottom line.
Richard Pieris Plastics sector top line rose by 32.5 per cent YoY to Rs. 1445.1 million 1QFY16 whilst operating profits increased significantly by 90 per cent YoY to Rs. 291.5 million.
Tyre retreading sector revenue increased by 20 per cent YoY and 5 per cent QoQ to Rs. 684.4 million in 1QFY16 whilst operating profit grew by 44 per cent YoY to report Rs. 148.2 million. The report added that the tyre sales of the brand “Nexen” continued to maintain its popularity whilst several new tyre sizes were introduced by the sector during 4QFY15. “In the current economic scenario transportation costs has witnessed a notable decline making it more affordable for the low income segment of the economy to replace tyres with expensive branded tyres. Arpidag Tyres are priced 60-50 per cent lower than brand new tyres hence creating a niche market for the company and as such the outlook of the tyre retreading sector is positive coupled with the increasing disposable income levels of the population,” the report has added.
Rubber sector revenue edged up by 14 per cent YoY Rs. 854 million and operating profit also rose by 36 per cent YoY to Rs. 164.6 million during 1QFY16. Retail sector saw a 17.7 per cent YoY growth in revenue to Rs. 044.5 million in 1QFY16 chiefly led by improved sales volumes.
The company’s continuous commitment towards expanding the supermarket chain based on the inelastic demand and accumulative disposable income levels at present would help the sector to be the growth driver for the group, according to the report, which highlighted that during 4QFY15 the group opened its newest large format retail store in Kottawa whilst it also began commercial operations in four Arpico daily outlets during the period.