LANKEM CEYLON PLC
Lankem Ceylon PLC Continues Growth Trajectory into the 3rd Quarter of 2022/23
- Continues growth momentum in Q3 and throughout the 9 month period demonstrates the Group’s resilience, continuous focus and perseverance against adverse external business dynamics
21st February 2023, Colombo: Lankem Ceylon PLC, a well-diversified conglomerate reputed for its market dominance in the areas of agriculture, consumer products, hotels, industrial chemicals, industrial flooring, Decorative Paints, Printing & Packaging and pest control posted a remarkable third quarter (Q3) results which resulted in a positive growth trajectory throughout the third quarter of the financial year 2022/23. This was based according to the latest financial results released to the Colombo Stock Exchange recently. At a time when Sri Lanka as a country is facing challenging times, the results achieved by Lankem Ceylon demonstrates the Group’s resilience through a challenging business environment to maintain business stability and sustainability.
During the third quarter ended 31st December 2022, Lankem Ceylon as a Group recorded a profit after tax of LKR 0.47 Bn which was a 331% growth compared LKR 0.1 Bn profit after tax reported during the corresponding period of 2021/22. Q3 revenue was LKR 9.3 Bn, which was a 75% growth compared to the same period last year whilst Gross Profit (GP) for the said quarter was LKR 2.8 Bn, a 149% growth compared to the LKR 1.1 Bn achieved during the same period last year. During the quarter under review, Profit Before Tax (PBT) was LKR 0.83 Bn, a 399% growth compared to the corresponding quarter in the previous year.
Considering the period of nine (9) months which ended on the 31st of December 2022, at Group level, Lankem Ceylon recorded a Profit After Tax (PAT) of LKR 1.98 Bn, an achievement which was 108 times higher compared to the break-even results achieved and reported during the corresponding period of last year. The Group’s revenue for the said period stood at LKR 25.2 Bn, a 68% increase compared to the achievements during the same period of the last financial year. Gross profit for the Group for the said period was LKR 8 Bn, a 178% increase compared to the LKR 2.9 Bn earned last year. Amidst hindrances in the external business environment, prudent operational practices, and efficient cost reduction initiatives along with continuous focus and perseverance is said to have resulted in the Group maintaining these levels of profitability and positive results throughout the period.
From a Q3 perspective, Lankem Ceylon PLC as a Company posted a revenue of LKR 2 Bn, an increase of 44% from the comparative period of last year. The Company’s PBT achievement was LKR 0.34 Bn, an increase compared to the LKR 0.14 Bn achieved in the same period of last year, whilst PAT was LKR 0.34 Bn for the quarter under review, which was an increase of 144% against the comparative period of last year.
A profitable Q3 with a trajectory towards positive and sustainable growth resulted in the Company posting a cumulative revenue of LKR 5.1 Bn, a 64% growth for the entire period (cumulative of 9 months) under review compared to LKR 3.1 Bn achieved last year for the same period. Further, the Company continued to contribute positively to the Group’s bottom line by achieving a PAT of LKR 1.4 Bn, a 532% growth compared to LKR 0.2 Bn achieved during the same period last year. PBT for the Company was similar. These notable achievements enabled the Group to be resilient during these trying times.
The remarkable performance of the Company which includes Paints, Agro Chemicals, Industrial Chemical and Pest Control, was a result of the Company’s continuous focus on eliminating operational cost inefficiencies and carrying out focused sales strategies. While working capital constraints, restricted credit lines and extended collection periods continued to create operational hurdles, restructuring of borrowings and continuous focus on cost optimization strategies in addition to maintaining the leaner and efficient operations enabled to negate the adverse impact to some extent and continue operations without any interruptions.
The packaging cluster, which includes ACME Printing and Packaging PLC and JF Packaging (Pvt) Ltd performed remarkably well during the said three months period to achieve a revenue of LKR 1.8 Bn, a notable increase compared to the LKR 0.6 Bn achieved during the same period of the last financial year 2021/2022. PAT for the period was reported as LKR 0.23 Bn compared to the loss of LKR 32 Mn reported during the same period last year. Considering the period of 9 months ending on the 31st of December 2022, the cluster posted a revenue of LKR 5.4 Bn which was a significant increase compared to the LKR 1.8 Bn achieved during the last year. PAT for the period was reported as LKR 0.88 Bn compared to the loss of LKR 0.1 Bn recorded during the same period of last year, a remarkable transformation compared to the loss reported during the same period of last year. Continuous focus on adopting prudent cost optimization strategies to improve the Groups’ Gross profit margins and the working capital cycle in addition to the infusion of working capital through a Rights Issue is said to have resulted in this laudable achievement.
For the period of 9 months, the Consumer cluster of the Group which comprise of C.W. Mackie PLC almost doubled its revenue by achieving LKR 5.5 Bn compared to the LKR 2.9 Bn achieved during the nine months of last financial year. The cluster further reported an operating profit of LKR 0.69 Bn which was an increase of 59% – a remarkable improvement from that of the same period last year. During the quarter ended 31st December 2022, the cluster recorded revenue of LKR 1.9 Bn and operating profit of LKR 0.24 Bn respectively, which was a 90% growth in revenue compared to the third quarter of 2021/22. Despite the adverse economic conditions which reduced the buying power of the average consumer, continuous changes to the sales and marketing strategies which included changes in pricing structures and promotional activities with the objective of giving customers value for money is said to have worked for the cluster. This enabled them to contribute positively towards the Groups’ achievements.
Despite the downturn in the tourism industry over the past few months, initiatives taken by Sri Lanka to boost the tourism industry has had a positive impact on the leisure cluster of the Group. For the said period of 9 months under review, the Leisure cluster also saw a revenue growth of 71% by achieving a revenue of LKR 0.7 Bn and 83% growth to achieve a revenue of LKR 0.3Bn for the 9 months period and Q3 ended 31st December 2022 respectively. However, despite the growth in revenue, the segment was not able to achieve profitability due to the increase in finance costs which had a replicating effect on the high level of fixed overhead costs. However, The Group is optimistic that with the Government’s focus on the tourism industry, the leisure segment will be able to reduce the operating losses and look towards profitability in time to come.
Incorporated in 1964, Lankem Ceylon PLC was originally formed as a crop protection company. Over the years, it has grown its core operations to include Coatings and Industrial Chemicals. The Company has also ventured into the packaging industry, the FMCG (fast moving consumer goods) space and in the leisure sector through its various strategic investments.
Lankem Ceylon PLC is a subsidiary of The Colombo Fort Land and Building PLC. The eminent members of the Board of Directors are Mr. S.D.R Arudpragasam (Chairman), Mr. A. Hettiarachchy (Deputy Chairman), Mr Suren Goonewardene (Managing Director), Mr. A.C.S Jayaranjan, Mr. P.M.A. Sirimane, Mr. Anushman Rajaratnam, Mr. G.K.B. Dasanayake and Dr. A.M.Mubarak.
Mr. Suren Goonawardene Managing Director Lankem Ceylon PLC.