Richard Pieris records 9 months revenue of Rs. 25.9 b

Monday, 17 February 2014 00:00 - - {{hitsCtrl.values.hits}}

The Richard Pieris Group ended its first nine month’s performance with a Group Revenue of Rs 25.9 b and Group Operating Profit of Rs. 2 b. The reported profits were adversely affected mainly due to the plantation sector with the increase in wages, reduction of the prices of rubber and adverse weather conditions in the upcountry resulting in a decline when compared to the corresponding period of the previous year. Retail sector The third quarter was the busiest period in the year for Retail with the seasonal peak in business in the month of December 2013 as well as the opening of its 15th Supercentre in the town of Matara.

The company continued its focus on marketing activities with a very vibrant ‘Christmas Millionaires’ campaign gifting Rs. 1 million on a weekly basis to six lucky winners for the third consecutive year, as well as a whole host of other consolation prizes for other winners. The turnover was similar to that of the previous period but the profitability was affected due to the imposition of the VAT of 12.5% on the retail sector. The company continued to focus heavily on managing overheads and inventory. Plastics and Distribution Sector The Plastic and Distribution sector was adversely affected due to difficulties faced by the dealers especially in the outstations. It is noteworthy that the 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 SBUs continued to search for market opportunities and many initiatives were undertaken during the quarter. Aggressive dealer promotions were carried out to ensure that the edge over the competitors is maintained. New marketing strategies were introduced and this is 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 costs. Plantation Sector The impact of the wage increase in the plantation sector employees had its impact on the reported results of the period under review which in turn affected the overall profitability of the Group. The drop in rubber prices, poor crops due to adverse weather conditions affected the sector’s performance in a negative manner. However, there was a significant increase in both the crop as well as the prices obtained for palm oil. The reduction in profitability in this sector adversely affected the Group results. Tyre Sector During the period under review the tyre sector of the Group reported an increase in their reported profits when compared with the results of 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. Rubber Manufacturing Sector The exports sector performed best out of all the Group companies recording exports of Rs. 2.1 b during the period. Exports were increased to USA, Europe as well as new markets which were sourced during the period which portrays the growth potential for the future. The sector continued its success from the first six months to the second half of the year with an overall growth in profitability. The latex foam business continued to thrive with a high level of technical and managerial excellence which enabled to maintain a healthy level of profitability with expansion of export markets despite the slowdown in European markets. Cost saving initiatives continued and the effective implementation of the biomass boiler contributed towards the saving of energy to the latex foam business. Richard Pieris Exports also developed several new products which were introduced to the European and US markets. Future plans The Group continues to focus on its core sectors and will utilise the local and global opportunities to expand its business. Planned expansions in its Retail operations will enable consumers to benefit from the high quality and services provided by the Arpico Super market chain. A spokesman for the company stated that the Group is already considering many expansion and new activities taking into account the strengths of the Group in the different sectors for its long term growth.