Financial Times

Richard Pieris' group 1st quarter results impressive
The Richard Pieris group last week announced impressive first quarter results showing a 100% increase in gross turnover to Rs. 2.17 billion and a sharp 203% increase in profit from operations to Rs. 162 million, compared to the same quarter in the previous year.

A company statement said major contributors to profit were the plantations, services, plastics and retail sectors. Profit attributable to ordinary shareholders also rose significantly to Rs 95 million, an increase of 140%.

The group's Chief Operating Officer, Pravir Samarasinghe said he was particularly pleased with the fact that each of the business units performed better than they had in the previous year. "Our results reflect the hard work expended by our people and justifies the strategic decisions that we took last year to aggressively expand the group's operations."

This is the first quarter in which the group has incorporated the results of its plantation companies as subsidiary companies into the consolidated Profit and Loss statement. Despite adverse weather conditions, the Group's two major plantation companies achieved greater profits than what they achieved for the same quarter in the 2003-2004 year, taking advantage of historically high rubber prices. Its contribution of Rs. 106 million towards the Group's operating profit made it the best performing division for the quarter.

The retail and distribution sector recorded an impressive 33% increase in turnover to Rs. 882 million for the quarter, due primarily to continued growth in the Arpico Supercentres. The retail division continues to make modest profits as a result of the low margins that are particular to this industry, the statement said adding that to ensure continued growth, three new franchised outlets were opened during the quarter and these are already contributing to profits. Profit before tax was Rs. 19 million, more than doubling budgeted profit, due primarily to improved margins of all product lines and a reduction in overhead expenses.

The rubber sector also experienced an exceptional quarter, increasing their turnover by 74% to 537 million. Associated companies of the Group continue to make significant contributions to the Group's profits. In particular, Dipped Products Limited, a manufacturer and exporter of latex gloves contributed Rs. 34.5 million to the Group's profit before tax.

The substantial increase in finance costs is largely due to the debt portfolio of the plantation companies being added to the Group's balance sheet.

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