JKH ends ‘pivotal’ FY25 setting stage for higher growth

Chairperson Krishan Balendra

• Marks fruition of bold investments: City of Dreams Sri Lanka; West Container Terminal and New Energy Vehicles business with BYD
• 113-key Nuwa hotel and the casino to be opened in August
• WCT-1, Colombo’s first automated deep-water terminal begins first phase with encouraging throughput and accelerating momentum over coming quarters
• BYD NEV range sales “significantly higher than expected”; future earnings expected to be material in the context of Group’s performance

Leading blue chip John Keells Holdings PLC (JKH) yesterday announced the conclusion of what it described as a “pivotal” financial year 2024/25 with performance in line with its expectations but more importantly, setting the stage for higher growth.

“The year under review has been a pivotal one for the Group, marked by bold investments coming to fruition with the successful launch of two of the Group’s most ambitious and largest investments to date – City of Dreams Sri Lanka and the West Container Terminal (WCT-1) at the Port of Colombo. These landmark developments represent transformative opportunities, poised to serve as catalysts for economic growth, reinforcing Sri Lanka’s position as a logistics and leisure hub in the region,” said JKH Chairperson Krishan Balendra in his review accompanying JKH’s FY25 Annual Report.

“I am confident these investments will redefine the Group, and its performance, while contributing meaningfully to the country’s economy,” Balendra emphasised.

He said that the Group’s financial performance remained in line with “our expectations, driven by the strength of our consumer-focused businesses which gained momentum quarter after quarter.” 

As anticipated, JKH’s overall Group EBITDA was affected by the substantial pre-opening, ramp-up, and operating expenses at the City of Dreams Sri Lanka integrated resort.

Recurring EBITDA, excluding City of Dreams Sri Lanka (CODSL), saw an increase of 12% to Rs. 50.43 billion in FY25 demonstrating the steady growth in the underlying businesses.

Group recurring PBT, excluding City of Dreams Sri Lanka, stood at Rs. 22.93 billion, a 60% increase from FY24.

Group revenue grew by 13% to Rs. 317.37 billion. Gross profit grew by 15% to Rs. 63.5 billion. Results from operating activities were down by 7% to Rs. 14.2 billion. Profit before tax dipped by 17% to Rs. 14.8 billion in FY25 and after-tax profit was down by 43% to Rs. 7 billion. Net profit attributable to equity holders of the parent was down by 53% to Rs. 5.32 billion.

Group PBT, excluding CODSL, was Rs. 10.85 billion, a 71% increase against Q4 2023/24. CODSL includes the depreciation charge and interest expense in the income statement pertaining to the Cinnamon Life hotel, amounting to Rs. 1.14 billion and Rs. 1.09 billion.

In 4Q of FY25, revenue grew by 11% to Rs. 89.5 billion. Results from operating activities rose by 14% to Rs. 8.5 billion. Pre-tax profit declined by 40% to Rs. 6.75 billion and after tax figure was down by 64% to Rs. 3 billion and bottom line by 73% to Rs. 2 billion.

JKH also announced a final dividend of Rs. 0.05 per share bringing the total to Rs. 0.15 per share in FY25.

Balendra said the Cinnamon Life hotel is currently fully operational with the launch of all restaurants and bars, conferencing spaces and outdoor locations. The hotel has been positively received by the market, both locally and internationally, with encouraging demand and bookings for the various spaces at the property.

“The completion of the remaining elements of the City of Dreams Sri Lanka integrated resort project is progressing well, with the fit-out and finishing works relating to the 113-key Nuwa hotel and the casino near complete for its planned opening in August 2025,” JKH Chairperson revealed.

“The WCT-1, the Port of Colombo’s first automated deep-water terminal, and a milestone project for the Group, commenced its first phase of commercial operations in 4Q 2024/25. The throughput to date has been encouraging and this momentum is expected to accelerate over the coming quarters,” he added.

Despite the translation impact of a stronger Rupee compared to the previous financial year, the profitability of SAGT recorded an increase driven by a 14% growth in volumes and an improvement in the mix. LMS recorded a strong volume growth of 15%, although profitability was impacted due to a contraction in margins mainly on account of intensified competition and a temporary oversupply of inventory.

The significant increase in the Consumer Foods EBITDA is attributable to both the Beverages and Confectionery businesses, driven by volume growth and improved margins.

The Supermarket business recorded a strong performance during the year, with same store sales recording a growth of 14.2% on the back of increased customer footfall.

John Keells CG Auto (JKCG) established its New Energy Vehicles (NEV) business during the year, and the pipeline of vehicle bookings received by JKCG for its BYD NEV range according to Balendra is “significantly higher than expected. Based on the current order book and expectations of deliveries in the ensuing quarter, the earnings are expected to be material in the context of the Group’s performance.”

The Sri Lankan Resorts segment recorded an increase in profitability on the back of a sustained recovery in tourist arrivals to the country, although offset by a decrease in profitability in the Maldivian Resorts and Colombo Hotels segments, mainly due to one-off impacts.

The Property industry group recorded an increase in profitability driven by sales at Cinnamon Life and VIMAN development projects, and profit recognition from real estate sales in Digana, through Rajawella Holdings Ltd.

NTB recorded a strong growth in profitability on account of robust loan growth, while UA recorded a growth of 15% in its gross written premiums, stemming from an increase in renewal premiums and regular new business premiums.

Balendra also said the Group reported a strong performance for Q4, driven by the strength of consumer-focused businesses which gained momentum quarter after quarter. Overall Group EBITDA was mainly impacted by the substantial pre-opening, ramp-up, and operating expenses at the CODSL.