Richard Pieris records turnover growth of 12%

The Richard Pieris Group ended its nine month’s performance in financial year 2012/13 with steady group operating profits compared to the corresponding period of the previous year. The nine months ended 31 December 2012 evidenced a positive performance in all its major sectors, with the reported turnover surpassing Rs.26 billion, which is yet another remarkable achievement.

Retail sector

During the third quarter, the sector focused on marketing activities with a very vibrant seasonal campaign. The Arpico Christmas Millionaire 2012 competition was extremely popular with the busy shoppers, where every week the lucky winner was rewarded with Rs. 1 million.

As a result of the amendment to tax laws, the sector faces a huge challenge where supermarket sales will be liable for VAT from Q4 onwards and intense preparatory work was carried out in preparation for this major changeover.  The sector faces a severe negative financial impact arising from its inability to claim any input VAT included in closing stocks and many challenges in terms of future pricing strategies. Clearly, smaller operators will have a state supported edge over the large retailers due to selective VAT imposition.

Plastics and distribution sector

During the period under review, the sector reported a significant increase in its sale of mattresses which proved the success of many sales promotional activities carried out, and the sector continued on a very aggressive marketing campaign throughout the festive season. The sector also expanded its sofa manufacturing unit which is based in the central province.

Plantation sector

The sector had a reversal of fortunes due to healthy tea prices. The decline in rubber prices affected the turnover of the group’s plantation sector.

 There was a drop in the production of both tea and rubber crops when compared with the corresponding period of the previous year which is largely due to the harsh weather conditions which prevailed during 2012.

Tyre sector

During the period under review, the sector experienced positive results from new brands of tyres which were introduced to the market during the previous quarter, namely ‘Xceed’ and ‘Nexen’, with favourable expectations for future.  Several improvements were made on the production floor which has reduced the cost of production, thereby improving the overall profitability. The sector expanded its market segment ‘Off the road tyres’ by adding a new size of tyres which was made possible by internal modifications to machines to execute the operation.

Rubber manufacturing sector

The sector continued on the success achieved during the first half year with both Richard Pieris Exports PLC and Richard Pieris Natural Foams performing well. Many initiatives were implemented during the period under review which resulted in a reduction of wastage levels. There was much focus on the effective management of working capital and overheads during the period under review. Arpitalian Compact Soles again has not been able to achieve the expected profitability.

The Group continues to capitalise on its solid business base and the key sectors of retail, tyre, plantations and plastics are expected to further improve performance during the final quarter of the financial year. The aggressive expansion of the retail sector is expected to continue and the group is focused on meeting the new challenges faced with the changes in tax legislation. A spokesman for the company stated that the outlook for the last quarter of the financial year is very positive.