JKH posts Rs. 3.58 b PBT in 1Q showing 17% growth

Sri Lanka’s largest conglomerate, John Keells Holdings (JKH) posted a Profit Before Tax (PBT) of Rs. 3.58 billion in the first quarter of the financial year 2016/17, which is a 17% increase over the Rs. 3.05 billion recorded in the previous financial year, the company said yesterday.

The profit attributable to equity holders at Rs.2.37 billion is an increase of 9% over the Rs.2.18 billion in the corresponding period of the previous financial year. The revenue at Rs. 22.73 billion for the period under review is an increase of 8% over the Rs. 21.10 billion recorded in the previous financial year. 

The company PBT for the first quarter of 2016/17 at Rs. 2.85 billion is a decrease of 12% over the Rs. 3.25 billion recorded in the corresponding period of 2015/16, largely due to a timing difference in receiving dividends, JKH Chairman Susantha Ratnayake said in his review. 

Growth was driven by several sectors including transportation that grew 27% over the first quarter of the previous financial years to record PBT of Rs. 711 million in the first quarter of 2016/17. 

“The increase in profitability is mainly attributable to the performance of the Group’s Ports and Shipping business, where South Asia Gateway Terminals (SAGT) recorded double digit growth in throughput. Whilst the Group’s Bunkering business recorded an improvement in margins, profitability was impacted due to a decline in volumes resulting from adverse monsoonal conditions which prevailed during the quarter,” the JKH Chairman said.

The Leisure industry group PBT of Rs. 558 million in the first quarter of 2016/17 is an increase of just 1% over the first quarter of the previous financial year. The City Hotel sector recorded an overall increase in occupancies and profitability. The Sri Lanka Resorts segment achieved higher average room rates due to successful yield management. 

“Whilst overall arrivals to Sri Lanka demonstrated strong growth in the first quarter of the financial year, the negative publicity and travel warnings following the flooding and landslides in May impacted arrivals in the month of June. The performance of the Maldivian Resorts segment was impacted by a slower than expected recovery of the overall market from the effects of political events in late 2015,” he added. 

The Property industry group PBT of Rs. 57 million in the first quarter of 2016/17 is a decrease of 72% over the first quarter of the previous financial year.  The corresponding quarter of the previous financial year had revenue from the ‘OnThree20’ and ‘7th Sense’ on Gregory’s Road residential development projects, both of which have since been completed. The construction of Cinnamon Life is progressing with expected completion in 2019. The demand for residential and commercial spaces within the Project remains encouraging.

The Consumer Foods and Retail industry group PBT of Rs.1.30 billion in the first quarter of 2016/17 is an increase of 48% over the first quarter of the previous financial year [2015/16 Q1: Rs.880 million], with both sectors contributing to the improved performance. The Frozen Confectionery and Beverage businesses witnessed a significant increase in profitability driven by double digit growth in volumes.

The performance of Keells Food Products was in line with expectations. The Retail sector recorded a strong performance aided by an increase in average basket values and a steady growth in footfall contributing positively towards a year-on-year growth in same store sales, together with a notable contribution from the newly opened outlets. During the quarter under review, the Nexus Mobile loyalty programme reached a landmark of 500,000 members.

The Financial Services industry group PBT of Rs.196 million in the first quarter of 2016/17 is a decrease of 26% over the first quarter of the previous financial year [2015/16 Q1: Rs.265 million]. 

The Life Insurance business recorded an encouraging double digit growth in gross written premiums. However, profitability was lower when compared to the previous financial year’s corresponding quarter which included the benefit of higher interest income received from the sales proceeds on the disposal of a 78 percent stake of the General Insurance business in January 2015. The performance of Nations Trust Bank was impacted by the reduction in net interest margins.

Other, including Plantation Services and the Corporate Centre recorded a PBT of Rs.735 million in the first quarter of 2016/17, this being an increase of 41% over the first quarter of the previous financial year [2015/16 Q1: Rs.522 million]. The increase in profitability is mainly on account of higher interest rates. Despite witnessing a decline in overall volumes, the Plantations Services sector recorded an improvement in profitability due to the stabilisation of tea prices.