Jul 25, 2019 (LBO) – John Keells Holdings PLC reported a 5 percent growth in Group revenue during the first quarter of the year of Rs.31.74 billion compared to the Rs.30.16 billion recorded in the previous financial year.
The Transportation, Consumer Foods and Retail industry groups continued their growth momentum from the previous quarter despite the disruptions post the Easter Sunday terror attacks which occurred early in the quarter.
The underlying performance of the Group set out below, is depicted after adjusting for the new Accounting standard SLFRS 16 which came to effect this year, for fuller disclosure.
Accordingly, EBITDA in 2018/19 is comparatively adjusted for the impact of SLFRS 16, on a like-with-like basis against the EBITDA in 2019/20 (adjusted EBITDA). The Transportation industry group EBITDA of Rs.1.06 billion for Q1 of FY2019/20 was a 14% increase over the adjusted EBITDA of Rs.929 million for the first quarter of 2018/19.
The gains were attributable to the strong performance of the Group’s Ports and Shipping business, South Asia Gateway Terminals, which enjoyed higher volumes and an improved volume mix. Profitability of the Group’s Bunkering business, Lanka Marine Services, was impacted by the significant variation in base fuel prices during the months of May and June, while the Logistics business recorded a strong increase in throughput of 30 per cent in its facilities.
Consumer Foods industry group witnessed growth on account of improved performance in the Beverages and Frozen Confectionery businesses, driven by double digit growth in volumes and improved margins as a result of higher operating leverage.
The Consumer Foods industry group 2 EBITDA of Rs.843 million in the first quarter of 2019/20 is an increase of 61 per cent over the adjusted EBITDA for the first quarter of the previous financial year [2018/19 Q1: Rs.522 million]. Retail industry group recorded a robust revenue growth of 20% which was driven by a strong performance in the Supermarkets business, supported by the rebranding initiative, expansion of outlets and a pick-up in average basket values.
Retail recorded an EBITDA of Rs.1.09 billion compared with the adjusted EBITDA of Rs.573 million in the same period last year. Three new outlets were opened during the quarter, bringing the total store count to 98 as at 30 June 2019; the planned outlet rollout for 2019/20 is 25-30 stores.
The Group’s Sri Lankan leisure business was significantly impacted by the Easter Sunday terror attacks and EBITDA for the first quarter of 2019/20 was a negative Rs.332 million, compared to the Rs.228 million (adjusted) recorded in 2018/19 Q1.
The City Hotels sector recorded a decline in both occupancies and average room rates but maintained its fair share of available rooms in the 5-star category in the quarter under review.
The Group is encouraged that forward bookings for the Sri Lankan hotels have witnessed an upward trend in recent weeks, reaching levels of approximately 75 per cent compared to the bookings received at the same time last year, indicating signs of recovery. The Maldives resorts segment recorded a strong growth driven by higher average room rates of the newly refurbished water bungalows and over water suites at Ellaidhoo Maldives by Cinnamon and Cinnamon Dhonveli Maldives.
Cinnamon Dhonveli Maldives was partially closed for refurbishment in May 2019 with expected completion in October 2019. The newly reconstructed Cinnamon Hakuraa Huraa Maldives and Cinnamon Bentota Beach will commence operations in December 2019, as planned. In the Property Industry Group, the Cinnamon Life project marked a key milestone in its construction in June 2019, with the topping-off of all its six buildings. Construction is now focused on the installation of the façade, mechanical and electrical services and interior works.
The pre-sales of the Residential Towers is currently at 65 per cent of total area available for sale, and the Group expects sales momentum to improve as completion draws nearer. The “Tri-Zen” residential development project completed its piling works in June, ahead of schedule. 207 of its 891 units were pre-sold as at 30 June 2019 and revenue recognition will commence from the next quarter onwards.
The Property industry group recorded a negative EBITDA of Rs.12 million in the first quarter, an year on year decrease compared to Rs.18 million (adjusted) recorded the previous year. The Financial Services industry group recorded an 11% drop in EBITDA (2019/20 Q1: Rs.774 million versus 2018/19 Q1: Rs.865 million] while Other, Including Information Technology and Plantation Services sectors recorded an EBITDA of Rs.625 million in the first quarter of 2019/20 over the adjusted EBITDA for the first quarter of the previous financial year [2018/19 Q1: Rs.1.38 billion], as a result of the decline in finance income at the Holding Company due to the deployment of cash in new investments and the share repurchase.
The Information Technology sector recorded a strong growth in profitability on account of onboarding new clients. 3 The Group’s carbon footprint and water withdrawn per million rupees of revenue decreased by 3 per cent and 9 per cent respectively, to 0.79 metric tons and 13.18 cubic meters, for the quarter under review. In absolute terms, the carbon footprint decreased by 3 per cent to 22,808 MT and water withdrawal decreased by 0.5 per cent to 419,748 cubic meters driven by the lower levels of activity in the Leisure industry group.
John Keells Holdings PLC (John Keells), a Sri Lankan company, which is also the country’s largest listed conglomerate in the Colombo Stock Exchange, operating over 70 companies in 7 diverse industry sectors. John Keells provides employment to over 13,000 persons and has been ranked as Sri Lanka’s ‘Most Respected Entity’ for 13 years.
Whilst being a full member of the World Economic Forum and a Member of the UN Global Compact, John Keells drives its vision of “empowering the nation for tomorrow,” through the John Keells Foundation and through the social entrepreneurship initiative, ‘Plasticcycle’ is a catalyst in scientifically reducing plastic pollution in Sri Lanka.