Ceylon Cold Stores reported Rs 42 billion in revenue during the March 2025 quarter, up 16% from a year ago, while profits grew 33% to Rs2.1 billion, driven by volume growth in its retail (Keells supermarkets) and manufacturing (ice creams, carbonated beverages) segments. Cold Stores recorded revenue of Rs 32.7 billion from its retail segment in the March 2025 quarter, up 17.3% from the same period a year ago.
While the segment benefited from electricity tariff reductions and cost-saving initiatives, EBIT margins contracted marginally by six basis points year-on year to 4.8%, reflecting a subdued Average Basket Value. However, margins improved 88 basis points on a quarter-on-quarter basis, First Capital Research noted in a recent report.
Retail revenue growth was underpinned by a 16.2% year-on-year increase in Same Store Sales, supported by a 12.9% rise in Same Store Footfall, despite a 2.4% decline in Average Basket Value. First Capital attributes the increase in footfall to a shift in consumer preferences from general trade to modern trade formats, driven by discounted pricing, consolidated product availability, and a higher frequency of store visits amid rising purchasing power.
Although deflationary pricing exerted downward pressure on ABV, the negative impact was partially offset by an increase in the number of units purchased per transaction, indicating improved consumer sentiment. As a result, the retail segment reported a year-on-year profit increase of 138.5% to Rs 769 million, further supported by an 8.4% reduction in finance costs. First Capital Research expects retail revenue to continue growing over the next few years, driven by continued same-store sales gains, a recovery in average basket value, and additional revenue from store expansions.
“The segment is well positioned to capitalize on rising GDP per capita and purchasing power amidst government sector salary hikes, supported by diversified product offerings, value-added products, and strong brand perception. With approximately 80% of stores located in the Western Province, the highest GDP-contributing region, Cold Stores’ locational strategy is strategically aligned to capture rising demand,” First Capital said.
In the manufacturing segment, Cold Stores recorded a 3.9% increase in profit from the previous year to Rs2.4 billion, supported by a 16.7% rise in revenue and a 28.0% reduction in finance costs. Volume growth in Carbonated Soft Drinks and Frozen Confectionery segments, up 16.0% and 12.0%, respectively, contributed to this performance.
However, EBIT margins declined by 439 basis points from the previous year due to a reduced contribution from impulse products, which fell to 36% of revenue from 39% the year before. Looking ahead, the segment’s revenue is projected to grow despite headwinds from electricity tariff increases and currency depreciation, according to First Capital Research.
“We anticipate the Frozen Confectionery business will drive earnings growth by strategically refocusing on high-margin impulse products and maintaining margins through continued volume growth, supported by its market leadership”.