Annual Report 2010-2011 - Colombo Stock Exchange

Chairman’s Review
Rubber
Although the sector has played a key role in enhancing the
Group’s reputation for high quality and dependable products,
the dramatic and unprecedented increase in rubber prices
had a severe impact on its profitability, specifically in the low
end products. Although sector turnover increased by 25% to
Rs. 2,215 mn, rubber sector recorded a negative operational
contribution of Rs. 25 mn, when compared to the profit of Rs.
65 mn in the financial year 2009/2010. Nevertheless, despite
current and potential challenges such as high rubber prices,
high cost of furnace oil and of electricity, the sector has focused
on improving operations and business processes, with the aim
of achieving reductions in cost and enhancements in quality.
Tyre
In the tyre sector too, although turnover increased by 20%
to Rs. 2,530 mn, profit from operations dipped to Rs.264
mn, despite having recorded a profit of Rs. 300 mn in the
financial year 2009/2010. Even though the entire tyre industry
was affected by the high rubber prices, Richard Pieris Tyre
Company was able to maintain a substantial performance.
The sector also benefitted from the process consolidation,
which reduced production cost. During the next year, the
sector expects further growth in volumes, market share and
profitability, as market conditions improve.
Plastics & Distribution
This year was both challenging and rewarding for the plastics
and distribution sector, with an exceptional increase in turnover
and profits. Revenue for the year increased by 33% from the
prior year, while sector profitability was also up from Rs. 321
mn in 2009/10 to Rs. 460 mn in 2010/11. Extensive volume
growth was visible in the Polyurethane, Rigifoam and Water
Tanks divisions. Continued focus on quality control at all stages
of the production process and the introduction of innovative
processes, have further strengthened the companies’ position
in this sector.
The Outlook for next year
In the coming year, The Group intends to continue exploring
opportunities for expansion and growth, while being vigilant of
global and local market conditions.
Dividend
During the year, the company declared and paid interim
dividend of Rs.0. 20 per share. The directors also recommend a
final dividend of Rs. 0.10 per share.
Conclusion
I take this opportunity to thank all our stakeholders including
the management team and employees, our suppliers, our
customers, our business partners and my co- directors of
Richard Pieris and Company PLC for their support given in
this challenging year. I also wish to thank all the shareholders
for the confidence vested in the Company, and ask for their
continued understanding and support.
Dr. Sena Yaddehige
Chairman/CEO/MD
27th May 2011
Services
The services sector includes various businesses outside
the Group’s main sectors of Plantations, Rubber, Tyre, Retail
and Plastics. During the year, the group re-entered the
financial services industry via the formation of its fully owned
subsidiaries RP Securities (Pvt) Ltd & RP Financial Services
(Pvt) Ltd. From the outset, the performance appears to be good
with a wide client base and positive results. The Group targets
at becoming a dominant player in the financial services market
domain by taking full advantage of its brand equity and countrywide
infrastructure.
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Annual Report 2010/2011 | Richard Pieris and Company PLC