Monday, October 25, 2010

Royal Ceramics 1H profit surpasses half a billion mark

Continuing with the impressive take-off in the first quarter, Royal Ceramics Plc has convincingly surpassed the half a billion mark in terms of net profit in the first six months of 2010/11 financial year.

Among the select few top blue chips to release interim accounts early, RCL had posted a net profit attributable to ordinary shareholders of Rs. 606.5 million in the first half ended on 30 September 2010, up by 114% over the corresponding period of last financial year.

Consolidated profit after tax was Rs. 635.8 million, up by 124% whilst gross profit amounted to Rs. 1.15 billion reflecting a growth of 45% in comparison to the first half of 2009/10 financial year. The significant growth in bottom line was aided by a healthy 48% increase in gross revenue to Rs. 2.84 billion in the six months ended on 30 September 2010.

In 2009/10 full financial year, Rocell’s gross profit grew by 29% to Rs. 2.1 billion, pre-tax profit by 86% o Rs. 1.001 billion and net profit by same percentage to Rs. 964 million. Turnover grew by 17% to Rs. 4.96 billion over 2008/9 financial year.

As confirmed by the second quarter and first half performance, Rocell is heading for a record financial performance hot on the heels of 2009/10 being its best in its 20 year history.

The first half performance had been boosted by a Rs. 207 million of other operating income including profit on sale of shares amounting to Rs.185.7 million.

In the first quarter they amounted to Rs. 183 million and Rs. 164 million respectively.

In the second quarter Rocell’s top line had amounted to Rs. 1.5 billion, higher in comparison to Rs. 1.2 billion posted in the first quarter of 2010/11. Gross profit was Rs. 640 million, also higher as against Rs. 516.2 million in the first quarter. Lower profit on sale of shares was the key reason for second quarter net profit of Rs. 224 million, in comparison to Rs. 382 million posted in the first quarter.

Rocell’s tiles business continues to boom with revenues in the first half amounting to Rs. 2.3 billion up from Rs. 1.6 billion a year earlier and Rs. 1 billion in the first quarter. This business segment’s net profit rose to Rs. 613.4 million, up from Rs. 348 million in the 2009/10 first half and Rs. 388.3 million in the first quarter of 2010/11.

The new segment, sanitaryware had increased sales to Rs. 238 million as against Rs. 75 million in the first half of last year and Rs. 101.4 million in the first quarter of 2010/11. The sanitaryware business is saddled with a loss of Rs. 6.9 million but bottom line has improved significantly considering the loss of Rs. 64.6 million in the first half of 2009/10. Of the Rs. 6.9 million loss in the first half, the bulk (Rs. 5.8 million) had been incurred in the first quarter.

Rocell is now boasting of an asset base of Rs. 7 billion, up from Rs. 6.4 billion a year earlier whilst its earnings per share at Group level is Rs. 10.95 and Rs. 5.54 at company level, up from Rs. 5.12 and Rs. 4.85 respectively a year earlier.

The company has also seen significant investor re-rating with share price trading three times higher than as at 31 March 2010. Last week Rocell share price closed up Rs. 29.80 to Rs. 323.90 (including returning to its previous all time high of Rs. 325) whilst as at 31 March 2010 it was only Rs. 113 reflecting the share price has increased by Rs. 211 or 186% since then.

The Board of Directors of Royal Ceramics Plc comprises A.M. Weerasinghe (Chairman), Dhammika Perera (Deputy Chairman), Nimal Perera (Managing Director), T.G. Thoradeniya, R.B. Thambiayah, L.T. Samarawickreme, M.D.S. Goonatilleke, G.A.R.D. Prassanna and R.N. Asirwatham.

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