CIC Holdings nearly doubles 9-month bottom line to Rs. 1.12 b

$ 6 m JV for cultivation and export of high value vegetables to start soon; begins corn biz to supply local feed industry

CIC Holdings Plc continues to record healthy growth, with a 63% increase in Group profit after tax to Rs. 1.34 billion in the first nine months to December 2015 over the corresponding period of last year. Profit attributable to equity holders rose by 87% to Rs. 1.12 billion. 

Group revenue in the nine months topped the Rs. 20 billion milestone, up by 15%. In the third quarter it grew by 14.5% to Rs. 7.45 billion. 

Consolidated pre-tax profit in 3Q was 30% to Rs. 690 million and after tax grew by 69% to Rs. 591 million.  CIC’sbottom line in 3Q saw a 114% growth to Rs. 561.6 million.

Chairman Harsha Amarasekera said the improved performance had been helped by increases in revenues and enhanced margins, lower funding costs and a one-time net gain from the sale of the Chemifix brand (sold the business for Rs. 345 million to Pidilite Lanka Ltd in November) along with expansion of CIC Godagama manufacturing facility.

He emphasised that all key segments except construction recorded both revenues and operating profits. 

At Company level, after tax profit rose by 73% to Rs. 563 million for nine months. Higher revenues and cost controls were among key contributors to Company level performance.

The Agriculture and Livestock sector achieved an operating profit of Rs. 1.07 billion in nine months, up by 23%. The Feeds business continued to do well and the sector is expected to continue to see strong growth over the long run with the contribution of two new projects. 

CIC has commenced work on the corn project aimed at supplying the local feed industry. The work on a $ 6 million joint venture for the cultivation and export of vegetables of higher value and quality is also to start shortly.

The Chairman said revenue as well as profits at agri businesses were affected due to a change in Government policy with regard to the model applicable to the fertiliser subsidy which is expected to be one-off in nature.

The fertiliser subsidy receivable at end of December 2015 was Rs. 2.27 billion compared to Rs. 2.83 billion a year earlier. The removal of the fertiliser subsidy mechanism should result in this gradually being fully paid down in financial year 2017.

CIC’s Consumer and Pharmaceutical sector’s operating profits grew by 3% to Rs. 445 million. Link Natural Products continues to record growth in revenues and profits. The Packaging sector recorded an operating profit of Rs. 190 million up by 17%. The Industrial Raw Material business recorded an operating profit growth of 12% to Rs. 85 million. 

CIC’s smallest sector in terms of contribution to revenue and operating profits, Construction, saw a 16% decline in operating profit to Rs. 31 million.

“Going forward the Board and senior management will focus on ensuring that all sectors of the business meet budgets while exploring new areas of investment and growth and the Company is confident of maintaining its growth in profitability,” CIC Chairman Amarasekera said in his review accompanying interim results.