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Cargills poised for exceptional growth, 100 more outlets in 3 years

Cargills (Ceylon) PLC has posted what the company called an "exceptional" third quarter with the country’s largest retailer in the consumer foods sector maintaining its growth momentum.

The company plans to open the next 100 Food City outlets within a course of three years with the newest store at Rajagiriya being the first of these.

The December quarter performance had outpaced the previous two quarters with Cargills posting a turnover of Rs.23 billion in the nine months ended December 31, 2009, up 2% from a year earlier.

Pre-tax profits in the nine months ended December 31, 2009 were up 21% to Rs.704 million from a year earlier while the after-tax profit of Rs.491 million was a growth of 26% from last year, the company said.

Cargills has a string of subsidiaries – Cargills Quality Foods (Pvt) Ltd., Cargills Distributors (Pvt) Ltd., Cargills Quality Dairies (Pvt) Ltd., Cargills Food Processors (Pvt) Ltd., Cargills Food Services (Pvt) Ltd., CPC Agrifoods Ltd., CPC Lanka Ltd., Cargills Retail (Pvt) Ltd., and Millers Ltd.

The company said that the previous year’s profit included a one-off investment gain of Rs.73 million and if this was discounted, the profit was up by a significant 55%.

"This success is attributed to the consumer confidence built by Cargills brands in their distinct differentiation for superior value for money and highest standards of quality and food safety," a company news release said.

During the December quarter, the Cargills group had expanded its consumer portfolio by launching ‘Cargills Finest’ a premium European range of processed meat and the ‘Milca’ powdered milk and cheese range.

The third quarter saw the company investing in its Kentucky Franchise chain of fast food restaurants by adding play areas to the outlets to consolidate the business. KFC is now claimed to be the largest chain of quick service restaurants.

"Our investments in expanding our manufacturing facilities have yielded results in the quarter ended. The industry growth and market share increases from these investments would be visible in the upcoming quarter," the company said.

Cargills has a strong presence in the country’s agriculture sector buying fresh produce from farmers for re-sale to consumers through its Supermarkets. The company has developed a strong supply chain between the farmer and the consumer which it said augurs well for the future with this sector now set to enjoy substantial growth.

Cargills had a stated capital of Rs.130.7 million, reserves of Rs.1 billion and retained earnings of Rs.1.3 billion in its books as at December 31, 2009 with total assets of Rs.10.4 billion running ahead of total liabilities of Rs.7.9 billion.

Group net assets per share had grown to Rs.10.92 as at December 31, 2009 from Rs.8.85 a year earlier while the company’s net assets were up to Rs.6.31 from Rs.5.88 during the comparative period the previous year.

The Cargills share traded at a high of Rs.66 and a low of Rs.51 during the period under review against a trading range of Rs.31.50 to Rs.22 a year earlier.

The directors of the company are: Messrs. L.R. Page (Chairman), V.R. Page (Deputy Chairman/CEO), S.V. Kodikara, P.S. Mathavan, Jayantha Dhanapala, A.T.P. Edirisinghe, S.E.C. Gardiner, Sunil Mendis, Anthony A. Page, J.C. Page, E.A.D. Perera and Mrs. S.R. Thambiayah.

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