Grain Elevators

Ceylon Grain Elevators profits grow in June with exports

ECONOMYNEXT-Sri Lanka's Ceylon Grain Elevators, a feed milling and poultry firm, said profits rose 8.2 percent in the June 2019 quarter to 187.8 million rupees from a year ago with better export demand, amid falling local sales for processed meat and broiler chicks following the Easter Sunday attack.

Earnings per share for the quarter were 3.13 rupees. Earnings per share for the six months to June were 7.10 rupees. The firm's share last traded at 61.90 rupees on Friday, closing 4.90 rupees higher.



Revenue grew 10 percent in the June quarter from a year earlier to 4.3 billion rupees, while cost of sales rose 10 percent to 3.9 billion rupees, leading to gross profits rising 11 percent 441.9 million rupees.



“The consistent feed quality and improved demand for day old chicks (DOCs) strengthened the Group revenue,” Chief Executive Cheng Chih Kwong, Primus told shareholders in an earnings release statement.



“Export market revenue from parent stock DOC’s also led to an increase in the revenue during the quarter," he said.



"However, the demand for processed chicken and broiler DOCs were adversely affected during the second quarter due to the aftermath of the April 2019 terror attack."



He said that lower demand for meat from hotels, restaurants and cafes following the attack led to lower demand for broiler DOCs from farmers.



He said that cost of production grew due to short supply of maize, which narrowed margins.



"It was noted that the issue of permits to import maize at the right time with the right quantitiy would be a definite relief to the industry at this juncture."



Net finance cost for the firm grew 47 percent to 24 million rupees in the June quarter after adopting the new SLFRS 16 standard on operating leases.



Lease liabilities for the quarter grew to 761.5 million rupees as at end June from the start of the financial year in January for a warehouse complex leased from the state under the new standard, balanced by a rise in right of use assets.#



For the six months to June, profits after tax from the milling and farming segment fell to 239 million rupees from 311.5 million rupees a year earlier due to rising operating costs despite a growth in revenue.



Profits from the poultry breeding and commercial meat segment grew to 377.7 million rupees from 316 million rupees with higher interest income.

(COLOMBO, Aug 12, 2019)

Grain Elevators expect hit from Sri Lanka’s self-imposed trade embargo

ECONOMYNEXT – Sri Lanka’s Ceylon Grain Elevators, a feed milling and poultry farming and processing group said it has liquidity and the it is facing several risk from import controls and exchange rate volatility.

CGE, and its subsidiary Three Acre Farms both publicly traded companies said it was able to continue operators as it was declared an essential service by the government during a Coronavirus curfew but business was disrupted.

Sri Lanka has printed unprecedented volumes of money in March and April leading to a steep fall in the currency and import controls have been slapped in the style of a self-imposed trade embargo.

Grain elevators expected activity to pick up, its cash position was strong but said the exact outcome was uncertain amid the new risks.

“Several other new risks are emerging including an increase in exchange rate volatility, foreign currency unavailability, and prevailing import restrictions.

“As such the overall impact on operations is not immediately predictable.”

Sri Lanka has slapped a series of trade controls, involving import suspensions, bans, and tariff hikes.

Due to classical economic illiteracy strong Mercantilism in Sri Lanka, there is a strong belief in the country that currency problems are not caused by liquidity injections and credit but by real economy factors like imports, especially oil.

The Mercantilist belief that oil imports cause currency collapses had been undermined the minds of some true believers after the 2015/2016 currency collapse when oil prices also collapsed, and also in 2020 when oil prices fell.


Sri Lanka slapped its worst self-imposed trade embargo in the 1970s when the Bretton Woods system of soft-pegs collapsed as the Federal Reserve printed money.

The US dollar then became a free-floating currency made up of printed or fiat money.

Sri Lanka however does not have a credible monetary regime, triggering a frequent balance of payments trouble, analysts have said.

Authorities have resisted a credible external anchor by running a discretionary ‘flexible’ exchange rate and has simultaneously resisted a credible domestic anchor by running ‘flexible’ inflation targeting regime. (Colombo/May28/2020-sb)