John Keells group processed food maker ups profits in 1Q

Keells Food Products PLC (KFP) reported higher revenues and profits in the three months ended in June 30, 2018 as the group specializing in processed food increased its sales during the first quarter of its financial year.

The company reported Rs.56.3 million in earnings with a per share earnings of Rs.2.21 for the April – June period (1Q19), up 34 percent from the same period last year.

The earnings however declined on a quarter-on-quarter basis by 15 percent. KFP, the leader in processed foods in Sri Lanka, had revenues of Rs.801.1 million for the period compared to Rs.729.8 million during the same period, last year.

This marked a top-line growth of 10 percent year-on-year (YOY).

The operating profit for the group rose 32 percent YOY to Rs.77.7 million as the group contained its operating costs to a greater degree while the top line stretched.

For the year ended in March 31, 2018, the company made a net profit of Rs.243.6 million, down 12 percent Yoymainly due to weak top line growth.

The processed food maker was facing headwinds from the weaker disposable incomes and the items such as sausages do not often get the priority among the household staples basket when the economy gets tightened. Sausages make up of nearly 50 percent of overall volumes of Keells Food Products.

Sri Lanka’s per capita consumption of sausages, meatballs slices and crumbed items are relatively low compared to regional markets.

Generally, there is a positive co-relation between the company’s performance and the disposable income,as frozen or processed foods haven’t still made it to the daily food plate of many.

Giant processed food makers globally have hit a snag due to the emergence of a large number of small scale organic food makers offering food preserved with their original nutritional content as consumer tastes are shifting towards healthier alternatives.

KFP reaches the in-home consumers through modern and general trade channels while hotels, restaurants and catering establishments (HORECA) constitute its largest customer segment.

During the first quarter, the group had made capital expenditure of Rs.19.5 million.

As at June 30, 2018 John Keells Holdings PLC and John Keells PLC held 79.86 percent and 10.09 percent stake in KFP respectively.