Richard Pieris Group posts Rs 2b operating profit

The Richard Pieris Group ended its first nine month's performance with a Group revenue of Rs 25.9 billion and Group operating profit of Rs. 2 billion.

The profits were adversely affected mainly due to the plantation sector with the increase in wages, reduction of rubber prices and adverse weather conditions resulting in a decline when compared to the corresponding period of the previous year.

"The third quarter was the busiest period for the Retail sector with the seasonal peak in business in December 2013 and the opening of its 15th supercentre in Matara. The turnover was similar to that of the previous period but the profitability was affected due to the imposition of VAT of 12.5 percent on the retail sector. The company continued to focus heavily on managing overheads and inventory."

The Plastic and Distribution sector was adversely affected due to difficulties faced by the dealers especially in the outstations. The sector reported only a marginal decline when compared to the previous year.

Each of the Sector's SBU's continued to search for market opportunities and many initiatives were undertaken during the quarter.

Aggressive dealer promotions were carried out to ensure that the edge over the competitors was maintained. New marketing strategies were introduced and this is expected to deliver positive results in the fourth quarter.

The sector focused on reducing overheads to enhance profitability levels, and focused on minimum working capital investments to optimise costs.

The impact of the wage increase for plantation sector employees had its impact on the results which in turn affected the overall profitability of the Group. The drop in rubber prices, poor crop due to adverse weather conditions affected the sector's performance negatively. However, there was a significant increase in crop and prices for palm oil. The reduction in profitability in this sector adversely affected Group results.

The tyre sector of the Group reported an increase in profits when compared with the results of previous year, where the sector continued to benefit from low material prices. Several process improvements helped to improve overall profitability.

The export sector performed best out of all the Group companies recording exports of Rs. 2.1 billion.