Richard Pieris records turnover growth of 12%

The Richard Pieris Group ended its first quarter with steady group operating profits compared to the corresponding period of the previous year. The three months ended 30 June 2012 evidenced a reasonable performance in all its major sectors with the reported quarterly turnover surpassing Rs. 8 billion which is yet another noteworthy achievement.

During the first quarter the group reported an operating profit of Rs. 920 million on a turnover of Rs. 8.1 billion.

During the last 12 months group debt levels were around Rs. 4.3 billion and despite significant new investment and expansion, the group has managed its debt levels without an increase and the overall Gearing Ratio has reduced from 39% to 35% during this period.

Retail sector

The retail sector continued its steady performance with a turnover of Rs.3.6 billion during three months ended 30 June 2012. The turnover of this segment grew by 17% when compared to the previous year. The first quarter of the financial year 2012/2013 started off vibrantly with the peaking of the Avurudhu campaign at Arpico which resulted in a lot of buzz in store in the first two weeks of the month of April. The above was achieved despite the effects on consumer confidence as a result of the depreciation of the currency, the increase in energy and fuel prices etc. The Company continued focusing heavily on managing overheads and inventory during the relevant quarter.

Plastics and distribution sector

The plastics sector recorded a turnover of Rs. 1.2 billion for the three months ended 30 June 2012. The turnover was 21% higher than the corresponding period of the previous year.

During the quarter the sector experienced a steady growth in mattress sales due to market penetration despite stiff competition. The furniture operation which commenced last year continued to grow and plans are under way to set up a new facility in the central region.

Plantation sector

The plantations Sector had successful results recording a turnover of Rs.1.8 billion during the three months ended 30 June 2012. This amounts to a decline of 8% in turnover. The plantation companies Kegalle and Namunukula Plantations reported a reduction in the turnover mainly due to the lower prices of rubber achieved during this period. It is pertinent to note that in the corresponding period of the previous year the plantations sector absorbed a cost of Rs. 626 million on account of gratuity and back wages consequent on the revision of the collective agreement.

Tyre sector

The tyre sector recorded a turnover of Rs. 674 million, a growth of 8% during three months ended 30 June 2012.

During the period under review, Tyre Company has consolidated its conventional tyre retreading process into one location which enables efficiencies in terms of energy, labour and other operational efficiencies and economies of scale.

Rubber manufacturing sector

The rubber manufacturing sector which includes the export of rubber products reported a Turnover of Rs.710 million and an operating profit of Rs. 91 million during three months ended 30 June 2012. The turnover of this segment has reported a growth of 48%.

This turnaround was as a result of solid Q1 performances from Richard Pieris Exports and Richard Pieris Natural Foams – the latex foam business of the group. Several improvements were made in the production lines which has increased the levels of efficiency. New markets were entered into and the sector experienced results of several campaigns which were carried out during the last financial period.

On the backdrop of the strong first quarter performance the Group is focused to capitalize on its solid business base. The group’s key sectors of retail, tyre, plantations and plastics are expected to further improve performance. The stock broking business is facing difficulty due to poor market sentiments and it is hopeful that it would pick up in the coming months. The group entered the insurance industry with its own identity in January 2012 and up to now the response from the market place is positive despite stiff competition within the industry. A spokesman for the company stated that the outlook for the rest of the financial year is very promising.