John Keells Holdings 9-month net up 6-pct, 3Q net down

Jan 29, 2016 (LBO) – Sri Lanka’s diversified John Keells Holdings said group net profit grew six percent in the nine months to December despite a weaker performance in transportation, leisure, information technology and plantation sectors in the third quarter.

Net profit grew six percent to 10.6 billion rupees in the nine months to December, but net profit was down six percent to 4.4 billion rupees in the third quarter.

The Transportation sector profit before tax (PBT) of 464 million rupees in the third quarter is a decrease of 32 per cent over the same period last year.

“The decline in (transportation) profitability is mainly attributable to the lower contribution from the Group’s Bunkering business and to a lesser extent the Ports business.”

“The Port of Colombo witnessed a year on year growth in excess of 5 per cent overall, which underscores the potential and augurs well for capacity led growth.”

The Bunkering business maintained its market share during the quarter under review. However, revenue and profitability were significantly impacted due to the steep reduction in global oil prices where inventory purchased at higher prices had to be marketed at prevailing market prices, the company said.

The Leisure industry group PBT of 1.22 billion rupees in the third quarter of 2015/16 was a decrease of 13 per cent over the same period last year.

“The City Hotels sector, with the exception of Cinnamon Red, witnessed a decrease in occupancies against the corresponding period of the previous year due to the increased supply of room inventory within Colombo and the lower volumes generated through the corporate and MICE segments.”

The Consumer Foods and Retail industry group PBT grew 86 percent to 1.08 billion rupees in the third quarter over the same period last year.

“Both the Frozen Confectionery and the Beverage businesses recorded encouraging results compared to the corresponding period of the previous financial year.”

The Property industry group PBT grew 48 percent to 558 million rupees in the third quarter over the same period last year.

“The improved performance is mainly on account of the revenue recognised, post the final tranches received as at 31 December 2015, at the “7th Sense” residential development project.”

“The construction of Cinnamon Life is in progress with pre-sales of both the residential and commercial space continuing to be encouraging. However, the project has encountered some unforeseen delays and as such, the construction of Cinnamon Life is now expected to be completed in the calendar year 2019.”

John Keells Holdings said the Information Technology industry group PBT of 92 million rupees in the third quarter was a 24 percent decrease over the same period last year.

“The Office Automation business, which is the largest contributor to profits, witnessed a decline in its performance mainly due to lower margins on account of the depreciation of the Rupee, despite recording a growth in volumes across its three main product segments.”

The Financial Services industry group PBT of 1.09 billion rupees in the third quarter of 2015/16 is a decline of 1 per cent over the third quarter of the previous financial year.

“The decline is due to Union Assurance PLC treating the post segregated general insurance company as an associate following the sale of a 78 per cent stake in January 2015.”

The Plantation Services sector recorded a PBT of 796 million rupees in the third quarter of 2015/16, which is a decrease of 29 per cent over the third quarter of the previous financial year.

“The decline in PBT is mainly attributable to the capital gain of 610 million rupees recorded in the third quarter of the previous financial year. The performance of the Plantation Services sector was negatively impacted as tea prices continued to remain depressed.”