CCS seeking ‘correct’ locations for Keells Super

Ceylon Cold Stores Plc (CCS) saw its pace of expansion slower than planned due to the difficulty in securing rental properties that satisfy the company’s requirements.

“Furthermore, despite us securing several locations, we find that some of the landlords are unable to keep up with the agreed timelines thus delaying the roll out plan,” Susantha Ratnayake, Chairman, CCS has said in his annual 2006/07 statement.

During the year the expansion of the “Keells Super” retail chain operated under Jaykay Marketing Services (Private) Limited, a 100% owned subsidiary of Ceylon Cold Stores Plc, continued, albeit at a pace slower than what was planned. The company now has a total of 24 supermarket outlets with several more to be opened in the next few months.

Ratnayake has reiterated the importance of securing the correct locations as being paramount in the overall success of any supermarket business.

He has also stressed that despite the CCS products having a large consumer base and strong brand equity, the macro economic fundamentals such as low inflation and a stable exchange rate are prerequisites for sustained growth.

The company recorded a revenue of Rs. 4.1 billion representing a growth of 16 percent for 2006/07, whilst the Earnings before Interest and Tax (EBIT) for the year amounted to Rs. 522 Million, a 37 percent increase over the previous year. The company’s Profit Before Tax (PBT) for the year was Rs. 451 million, an increase of 39 percent whilst the profit after tax of Rs.270 million, represents an increase of 22 percent over the previous year.

The approximately Rs.800 million investment in bottling capacity now enables the company to widen its product lines, pack sizes and flavours to take advantage of gaps in its offering. Despite the significant reduction in demand from the North and the East, Ratnayake has said that the company is confident that overall demand for the products will increase in the short and medium term.

“Our production capacities in the frozen confectionery plant are near optimum and we are presently evaluating the investment required to enhance our production capabilities,” he has said, adding that the company is also evaluating the existing distribution model for frozen confectionery and all other processes and cost structures to ensure all operational and cost efficiencies are focused upon.