John Keells Holdings reports weak results, 62% of Cinnamon Life residencies sold

Krishan Balendra - JKH Chairman/CEO designate

July 29, 2018 (LBO) – Sri Lanka’s most important listed company, John Keells Holdings (JKH) reported weak results for the quarter ended June 2018.

Despite an impressive 12% increase in revenue, margins were compressed translating to a 23% drop in the bottom line compared to the June quarter 2017. The company earned Rs2.2bn (US$14mn) for the quarter, on revenue of Rs30bn (US$188mn).

Aside from the financial sector, results were weak across the board.

  • Financial Services PBT was up 131%
  • Transportation PBT was modestly up 4%
  • Leisure reported a loss of Rs278mn
  • Property PBT was negligible but down
  • Consumers foods PBT was down 46%
  • Retail PBT was down 51%
  • Other/IT/Plantations PBT down 28%

The company’s shares are trading at Rs142, below their net asset value of 144.  Its market capitalisation is the second largest on the Colombo Stock Exchange at US$1.25bn.

The sluggish results come ahead of a change of leadership next year where Deputy Chairman Krishan Balendra will become Chairman and CEO.

The key driver of the group’s future earrings will be their US$1bn Cinnamon Life property development project.  The development includes residential, commercial, hotel, and MICE tourism venues.  Cinnamon Life will become the core of the group’s leisure sector.  The company disclosed that 62% of the residential floor space in the project has already been sold. “Construction is progressing with encouraging momentum” according to Chairman/CEO Susantha Ratnayake’s statement in the earnings release.