Crown for Carson

Carson Cumberbatch Plc has established a record for the highest ever profit for a quarter by a listed entity.

The Group recorded a profit after tax of Rs.5.77 billion, which includes a one off book gain of Rs. 1.4 billion resulting from a Group restructuring exercise carried out during the quarter.

The restructure involved an offer to acquire shares of the minority shareholders of the Malaysian oil palm firms, in exchange for Bukit Darah shares held by Carson on a pre-agreed basis.

The transfer of these Bukit Darah shares to minority shareholders during the restructure process, resulted in the parent company booking a capital gain of Rs.1.4 billion.

However in a review accompanying interim results Carsons said: “These profits do not form part of the recurring profits of the core businesses and is a one off gain recorded due to the restructure.” The profits arising from the core businesses amounted to Rs.4.37 billion, it added.

Analysts said that within this Rs. 4.37 billion is a further Rs. 1.4 billion which originated from capital gains from the sale of long-held strategic stakes as part of investment portfolio.

Even if this figure was discounted, Carsons ending the first quarter with Rs. 2.9 billion up from Rs. 2 billion is a noteworthy achievement according to company analysts.

Net profit attributable to equity holders was Rs. 3.5 billion, up by 195% over the first quarter of last year.

In 2010/11 financial year Carson produced its best results with a bottom line of Rs. 4.6 billion whilst after-tax profit was Rs. 9.72 billion and pre-tax amounted to Rs. 12.3 billion.

The current year’s first quarter of Carson profit figure from different levels is the best ever produced in a quarter analysts added. The core profit of Rs. 4.3 billion is also above the biggest ever profit (Rs. 4 billion) reported by a listed entity in the first half – Commercial Bank. Premier blue chip JKH reported a Rs. 1.3 billion net profit (up 35%) in the first quarter which is not a traditionally strong period whilst its best quarters are usually third and fourth.

Carsons said the core businesses all recorded good growth in profits reflecting both the vibrant emerging economic opportunities in Sri Lanka and buoyant global commodity prices. The investment and brewery businesses each felt the benefits of the strong resurgence in investor and consumer confidence which translated to buoyant conditions on the Bourse and greater spending power amongst consumers. The brewery business, however, decided to exit from its investment in India and recover its investment cost on the basis that it would be preferable to focus on the Sri Lankan market which offers immediate prospects for growth, as opposed to India which requires continued capital commitments over the long term to establish a market presence. The transaction is awaiting regulatory clearance. The leisure sector recorded an encouraging performance which is expected to gather momentum in the latter part of the year, led by the strong performance of the Sri Lankan tourism industry.

Global commodity prices and improved efficiencies and cost savings in the plantation business translated to better earnings from this sector. The plantation business ventured into the downstream segment of the oil palm industry with the acquisition of three operating entities held by Premium Nutrients Berhad, a specialty fats manufacturer, with operations in Malaysia and India. This acquisition which took place in July, is expected to strengthen the business model of the plantation business by enhancing its scope for value addition and enabling better risk management by mitigation of the risk exposure to commodity prices.

The consolidated net assets attributable to Carsons shareholders stood at Rs.25 billion, while its market capitalisation stood at Rs.118 billion as at the end of the quarter.