Richard Pieris profits increase to Rs 465mn

The group recorded a turnover of Rs.4.6 bn for the first quarter ending June 30 2007 which was an increase of 26 per cent compared to the previous year. Group operating profits increased by 91 per cent to Rs.465mn during the same period.

This comparison is excluding a non recurring capital gain of Rs.232mn arising through the relinquishment of leasehold rights in the Plantation sector during the first quarter of 2006/2007.

Plantations, Retail, Plastics and the turnaround of the Tyre Sector contributed positively towards this growth. However profit after tax reduced to Rs. 112mn due mainly to high finance cost. Profits attributable to the equity holders of the parent amounted to Rs.60mn.

The Rights Issue announced in August 2007 is expected to raise Rs. 1 bn and will be used entirely to reduce the bank borrowings of the group.

The interest savings will have a positive impact on profitability.

The Plastics and Distribution sector continued to record satisfactory performance with an operating profit of Rs.67mn, being 134 per cent higher than last year. A new warehouse in Mattegoda and two factories in Horana are expected to be commissioned by November 2008 to augment capacity and to replace the Mattegoda factory that was damaged by fire in October 2006.

The Tyre sector recorded an operating profit of Rs 33 mn compared to an operating loss of Rs 16.6 mn in the corresponding period of last year.

The initiatives to increase turnover, improve margins, reduce overheads and expand the product portfolio, including obtaining the dealership for Birla tyres of India, has contributed positively to improved results. The Retail sector has continued its steady progress recording an operating profit of Rs. 91mn which was 10 per cent higher than the previous year. Additional resources will be allocated to expand the Arpico supercentre network in strategic locations to maintain the growth momentum.

The Plantation sector recorded a successful first quarter reporting an operating profit of Rs. 253mn.