Richard Pieris Group in the Elite League of over Rs.3bn profits

A Growth of 200% in Profits after Tax

 

Richard Pieris Group (RPC) is one of the largest and diversified Groups in the country with a history and tradition exceeding 78 years with over 42 subsidiaries and employees in excess of 30,000 has announced their financial achievements in a media conference held in Colombo.

Dr. Sena Yaddehige, Chairman of RPC group said, “The financial year 2010/11 was a significant year in its entire history where the Group posted an all time high Profits from Operations of Rs.3.4bn for the financial year ended 31st March 2011.”

This signifies a growth of Rs.1.5bn when compared to the previous financial year. The Group Profit after Tax amounted to Rs.2.1bn which is a staggering growth of 200% when compared to last year’s reported results. It is noteworthy to mention the results are solely from operating businesses and do not include any capital gains.

Plantations Sector consists of three public quoted companies namely Kegalle Plantations, Namunukula Plantations and Maskeliya Plantations generating an operating profit of Rs. 2 bn. Kegalle and Namunukula plantations made the biggest contribution due to historically highest prices in Rubber and Palm oil while the Contribution from tea was minimal due to high wages imposed two years ago. The Retail Sector reported a sectoral profit of Rs.828mn which resulted in a growth of 61% despite of heavy investments incurred for expansions. Group is currently well poised with its optimistic plans to exploit the opportunities of post conflict era, he added.

Group Chief Financial Officer Mr. Jagath Dissanayake mentioned that the steady improvement of the economy in post war Sri Lanka was an underlying factor in what the Group achieved during the financial year 2010/11. A focused strategy and prudent financial management can be attributed as the vital ingredients of success. The Group has kept its promise of a turnaround and a positive outlook where it rationalize its business portfolio and enhanced productivity and focused on its core business activities to take advantage of the economic upturn. In a year of expansion there would be a general tendency of an increase in the level of Gearing to meet funding requirements, but Richard Pieris Group proved this otherwise by reducing its Debt levels by approximately Rs.1bn during the last financial year with a reduction in interest expenses amounting to Rs.175mn.

The Group reported a Turnover of Rs.27.2bn during the year ended 31st March 2011 which was an increase of 22% when compared to the last financial year. The retail sector contributed 40% of Group Turnover with another excellent year. The aggressive expansion of Supercentres and robust marketing strategies enabled the success in the retail sector. The sector opened its 11th large format retail outlet, popularly known as “Supercentres” in the city of Wattala during the year. This outlet, which is in excess of 56,000 square feet can comfortably park 175 cars and regarded as the most environmentally friendly retail store in the island to date. Newest Supercentre No.12 called “Blue Wonder” was opened last month at Kadawata with an area of 25000 square feet currently being increased to 37000 with 70 car parks. Next one to be opened within the next 2 months is the biggest southern Supercentre, “Big Blue” at Galle with an area of 75000 sq ft and over 100 car parks.

The Supercentres and Superstores outlets of the Retail Sector are benchmarked against global retail models and un-doubtably the sector is the trend setter in the retail industry of Sri Lanka. Customer convenience has enabled the Arpico Super centres and Superstores to gain a competitive edge over its rivals. All Supercentres and Superstores have ample parking space, wide aisle space for easy shopping and state-of-the-art cool rooms to provide fresh products. The Arpico Privilege Card customer base continued to grow with its membership increasing to approximately 200,000 by the end of the year. Large array of rewards to members contributed to the increasing popularity of the Privilege Card.

Despite the negative growth in the agricultural sector initially, the year witnessed the sector encouragingly maintaining its prominence with a 11.9% contribution to the national GDP. The Richard Pieris Group possesses 3 of the largest plantation companies in the country with diverse crops and includes high grown, mid grown and low grown tea, rubber, oil palm, coconut, cinnamon, cardamom, rambutan and other crops contributed to approximately 30% of Group Turnover. High prices obtained for Rubber was a key contributing factor towards the sector reporting a Turnover of Rs.7.7 bn which is an increase of 18% over last year.

The Tyre Sector and Plastics Sector also recorded steady operating profits amounting to Rs.724mn and contributing approximately 20% of Group Operating Profits.

The Tyre Sector of Richard Pieris Group which facilitates the entire tyre retreading value chain is the pioneer and market leader of tyre retreading in Sri Lanka. The tyres being re used has indirectly contributed to the Country’s economy by decreased transport costs and outflow of foreign exchange on imported tyres.   Richard Peiris Tyre Company, the largest tyre retreader in Asia, having a large dealer network with 1300 Dealers Island wide, rebuilds more than 600,000 tyres per annum. During the year under review it increased its manufacturing capacity and enhanced its product range, both in the retreading and trading product in order to meet increased customer demand. The company’s retreading turnover increased by 23% and trading turnover increased by 21%, increasing its share of the market. The Company has consolidated its position in the trading business and has successfully completed the year under review with a substantial turnover growth. At present the Company is the sole agent for Birla Tyres India, and also represents Corsa tyres of Indonesia. Birla Tyres are the manufacturers of truck, light truck and agricultural vehicles. Corsa tyres specialize in supplying tyres for passenger cars and vans. In addition to this, Sales of tubes, flaps and three-wheeler tyres have also increased. The wide dealer network has proved to be a significant competitive advantage and has enabled the company to deliver the imported tyres to the customers across the country within two days, with the increased efficiency improving the delivery times to one day. The sharp increase in the raw material prices proved to be a considerable challenge during year under review. Rubber prices have doubled during the last twelve months and there is no indication that these prices will come down in the near future. Steps have been taken to increase efficiency and maintain production at the optimum level for each plant. The Company continuously invests in the work force and believes that efficient human resources are vital to its growth.

  

The Plastics Sector manufactures and markets a wide range of products made of polyurethane foam, rotational moulded plastics, expanded rigid polystyrene, PVC, domestic and industrial based rubber products, and other categories such as water pumps, PVC doors and CFL bulbs. It also manufactures & distributes furniture. The year under review was both challenging and rewarding with an exceptional increase in turnover and profits. Sales revenue increased by 33% compared to the prior year. Volumes in the Polyurethane, Rigifoam and water tanks divisions grew extensively.

Manufacturing was well planned resulting in increased productivity, and catered to market demand in terms of both quantity and quality, while keeping in view the need for effective controls on inventory levels. Continued focus on quality control at all stages of the production process and the introduction of innovative processes further strengthened the quality of products. 

The Group has structured its Corporate Social Responsibility objectives to protect the interests of its stakeholders. It has instituted a policy that requires each of its Sectors to plan and execute sustainable and wide-ranging programmes in all areas in which it carries out its business. In being a greener organization the super centre in Wattala was put up with “sky lighting” and “rain water harvesting initiatives” which demonstrates the Group’s commitment to the environment. During the period under review Arpico – Plastishells, pioneer in plastic water tanks in Sri Lanka achieved another milestone when it installed the first ever Arpico Green Gas unit of 5,000 litres at a leading hotel in Colombo. In addition several charitable projects were conducted during the year which included donating Arpico Mattresses to the flood victims in the North and East area in collaboration with Sri Lanka Rupavahini Corporation.

After disconnecting from the Asia Capital which was an associate company of Richard Pieris Group, it has initiated the development of its own financial services sector in 2011.  During the fourth quarter it launched RP Securities (Pvt) limited as a fully owned subsidiary of the Group which engages in Stock Broking and other related financial activities.