Keells Food posts big 9-month loss due to setback in India

Keells Food Products (KFP) has suffered a substantial group loss of Rs.107.3 million in the nine months ended December 31, 2009, down from a profit of Rs.16.8 million a year earlier largely on account of its Indian operation "continuing to present many challenges," shareholders have been told in an interim financial statement.

Against the group loss for the period under review the company posted a net profit of Rs.27.8 million through its local operations which nevertheless was 38% down from the previous year’s profit of Rs.44.8 million.

The interim statement says that KFP has invested Rs. 116.1 million in John Keells Foods India (Private) Ltd. and Rs. 1.04 mn. in Keells Food Products Mauritius during the period under review.

KFP while stating that the challenges in India "are being addressed," has said the company’s presence there has been well established but the volume growth had been slower then anticipated.

JKH Chairman Susantha Ratnayake has explained in an interim report to parent company shareholders that the performance of their processed meats business in India which had been ``below expectation’’ had depressed the KFP results.

At company level, KFP posted revenue of nearly Rs.1.4 billion, marginally down 3% from a year earlier in the period under review with the profit after-tax translating to an earning per share of Rs.3.27, down from Rs.8.96 during the comparative period the previous year.

The group results too saw a slight 2% dip in revenue to nearly Rs.1.4 billion and the net loss for the period translated to a loss of Rs.12.62 per share against a profit of Rs.3.36 a year earlier.

According to the interim statement, sales in India had grown to Rs.118.2 million from Rs.84.3 million a year earlier.

KFP had a stated capital of Rs.274.8 million, up from Rs.99.8 million a year earlier, capital reserve of Rs.92.8 million and revenue reserves of Rs.158.3 million.

The KFP share traded at a high of Rs.79 and a low of Rs.63 during the period under review against a trading range of Rs.60 to Rs.42.25 a year earlier.

JKH with 65.66% and John Keells PLC with 9.28% are the major shareholders of KFP followed by Alliance Finance (5.27%) and Walkers Tours (4.47%). Other JKH group companies are also within the first 20 shareholders.

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