Richard Pieris Group in record profits

*Profit before tax of Rs 1.1 billion

*Highest profits after five years

Richard Pieris Group reported healthy results despite the many challenges faced both in the world and local environment. The Group made a net profit before tax of Rs 1.1 billion which was the highest profit achieved in the last five years. Group borrowings reduced by Rs 1.6 billion to Rs 5.2 billion thereby further strengthening its Balance Sheet.

Group Chairman Dr. Sena Yaddehige

The Group achieved a turnover of Rs 22.3 billion, being a 6 percent increase over last year. Operating profit before interest and tax amounted to Rs 2 billion, an increase of 44 percent from last year. Profit from operations after interest amounted to Rs 1 billion compared to a loss of Rs 58 million last year.

The net profit for the year was Rs 728 million compared to a loss of Rs. 305 million last year. Margin enhancement, cost and working capital management initiatives helped improve profitability.

The Retail Sector has been one of the most growth oriented arms of the Group during the past few years. Turnover increased from Rs 8.8 billion to Rs 9.2 billion and operating profits increased by 9 percent to Rs 515 million.

While the turnover increase was 5 percent, continued emphasis on the management of working capital, stocks in particular, and overheads resulted in improved profitability. There was a marked improvement in performance during the latter part of the financial year, especially in the seasonal month of December 2009 and the fourth quarter thereafter.

This is evidence of a positive trend in market sentiment in post-war Sri Lanka and also demonstrates the potential of the retail industry, for future growth.

An aggressive and accelerated expansion of its chain of outlets in targeted areas of the country is planned in order to capitalize on the post war economic boom that is expected in the ensuing years.

The Plantation Sector reported an increase in turnover from Rs. 6 billion to Rs 7.3 billion this year with the improvement in commodity prices while the operating profit showed an increase of 48 percent from Rs 555 million to Rs 823 million.

Profit recorded during the year was commendable considering the steep wage increase granted in September with retrospective effect from April 2009, which represented an increase of 42 percent. The Tyre Sector had yet another successful year with a significant growth in profitability.

Turnover remained almost static at Rs 3.1 billion while operating profits increased by 27 percent to Rs 300 million. Low rubber prices that prevailed during the first half of the year resulted in healthy profit margins.

The Plastic Sector is expected to show steady growth and improved performance in the coming year with the envisaged improved economy and increased demand from the North and East of this country.

The export oriented Rubber Sector experienced a year of contrasting fortunes. The first half of the year witnessed a downturn in volumes with the worldwide recession. However the lower raw material prices especially that of rubber, helped reduce costs and improve profitability.

The Group will continue to focus on its core businesses consolidating and strengthening its operations with selective expansion in trust areas whilst closely evaluating opportunities that arise from the peace in the country and the recovery of global markets.

The Group’s borrowing position has improved considerably with a reduction of debt by Rs 1.6 billion during the year under review and options to further reduce gearing are being looked at.

With stronger internal cash generation and a healthier balance sheet, the Group is well positioned to take advantage of the post-war emerging opportunities and aggressively expand and grow its operations and profitability.