Nestlé 1Q revenue up 11% to Rs. 8.6 b

Leading nutrition, health and wellness company, Nestlé Lanka PLC said yesterday it has delivered a revenue of Rs. 8.6 billion with a YoY growth of 11.0% for the first quarter ending 31 March 2014.

This double digit increase was largely benefitted by strong growth in the company’s exports of Maggi Coconut Milk Powder. Nestlé also posted a profit after tax of Rs. 1.1 billion. 

“Our continued investments in 2013 and 2014 in marketing of our brands set the foundation for us to further leverage our assets, our scale and our capabilities and to work smarter,” said Ganesan Ampalavanar, Managing Director of Nestlé Lanka PLC.

“This has enabled us to deliver a solid performance for the first quarter, thanks in large to the steadfast work and alignment of our people towards our goals and priorities for the year. We aim to continue being disciplined in driving and sustaining this good performance for the rest of 2014.” Q1 saw Nestlé Professional, the company’s food service arm which caters to the ‘out-of-home’ market, launch its revolutionary cold vending beverage solution with Nescafé ice coffee and Nestea ice lemon tea for the first time in Sri Lanka. 

Nestlé’s food brand Maggi was also voted ‘Food Brand of the Year’ and ‘Youth Food Brand of the Year’ for the second consecutive year at the SLIM Nielsen People’s Awards in Q1. The company also kicked off its ‘Choose Wellness, Choose Nestlé’ campaign in the first quarter. The campaign involves nutritionists visiting over 30 locations in a mobile ‘wellness’ unit, who, in addition to creating awareness on the nutritional advantages of Nestlé products also conduct free nutrition counseling. This campaign has reached approximately 10,000 people to date.

As a leading nutrition, health and wellness company, Nestlé recognises that food is a conscious way to bring about health and nutrition benefits to consumers. The company is committed to delivering ‘tasty nutrition’ – ensuring that all of its products deliver a nutritional advantage whilst continuing to taste good too.

Nestlé is also regularly reviewing and reducing the sugar, salt and fat content in its products and is focused on public programs and campaigns to help create awareness of the importance of healthy eating and an active lifestyle.

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Sri Lankan shares rise to over 3-mth closing high

May 7 (Reuters) - Sri Lankan stocks rose on Wednesday to hit a more than three- month closing high, led by shares of large cap companies traded in high volumes, while foreign inflows and a lower interest rate regime helped boost sentiment, dealers said.

The main stock index rose 0.43 percent, or 26.47 points, to 6,252.60, its highest close since Jan. 24.

The day's turnover was 1 billion rupees ($7.66 million), more than this year's daily average of 969.3 million rupees.

Offshore investors were net buyers of 270.6 million rupees worth of stocks on Wednesday, but they have been net sellers worth 6.94 billion rupees so far this year.

Shares in large cap Bukit Darah PLC rose 1.47 percent to 612.8 rupees, while Ceylon Tobacco Company PLC rose 1.51 percent to 1,099.4 rupees.

The market gained 4.28 percent in April as some retail investors started buying risky assets across the board as the central bank kept policy rates steady at multi-year lows for the third straight month. 

($1 = 130.5950 Sri Lanka Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)

Sri Lanka shares close up 0.4-pct

May 07, 2014 (LBO) - Sri Lanka's shares close 0.43 percent higher with index heavy stocks gaining amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 26.47 points higher at 6,252.60 up 0.43 percent. The S&P SL20 closed 9.83 points higher at 3,433.95, up 0.29 percent.

Turnover was 1.00 billion rupees, down from 1.30 billion rupees a day earlier with 104 stocks close positive against 80 negative.

Seylan Bank closed flat at 65.00 rupees with two off market transactions of 132.15 million rupees contributing 13 percent of the daily turnover.

John Keells Holdings closed 90 cents higher at 235.00 rupees with two off market transactions of 95.12 million rupees contributing 10 percent of the turnover.

JKH’s W0022 warrants closed 10 cents lower at 64.00 rupees and its W0023 warrants closed 90 cents higher at 69.80 rupees.

All off market deals accounted for 27 percent of the daily turnover.

Ceylon Grain Elevators closed 2.50 rupees lower at 36.20 rupees and Softlogic Holdings closed 70 cents higher at 12.50 rupees, attracting most number of trades.

Foreign investors bought 410.36 million rupees worth shares while selling 139.80 million rupees worth shares.

Ceylon Tobacco Company closed 16.40 rupees higher at 1,099.40 rupees, contributing most to the index gain.

Asiri Hospital Holdings closed 1.20 rupees higher at 22.50 rupees and Bukit Darah closed 8.90 rupees higher at 612.80 rupees.

Sampath Bank closed 2.20 rupees lower at 186.80 rupees and DFCC Bank closed 1.90 rupees lower at 158.10 rupees.

LOLC closed 1.90 rupees lower at 78.10 rupees and Colombo Dockyard closed 4.70 rupees lower at 192.00 rupees.

Dialog Axiata closed 20 cents lower at 9.30 rupees and Sri Lanka Telecom closed 10 cents higher at 48.10 rupees.

John Keells Hotels closed 80 cents higher at 14.30 rupees.

Sri Lanka poultry feed mill group in the red

May 07, 2014 (LBO) – Sri Lanka’s Ceylon Grain Elevators group, which has interests in feed milling and poultry said it lost 7.8 million rupees in the March 2014 quarter as demand for feed fell, though day old chick demand was recovering.

The group reported losses of 13 cents per share for the quarter. At core company level, it lost 52 million rupees.

Group revenues fell 20 percent to 2.58 billion rupees and expenses fell 21 percent to 2.4 billion rupees shrinking gross profits 3 percent to 150 million rupees in the quarter.

Cheng Chih Kwong, Primus said average selling price of chicken fell amid a glut in the market and feed sales also dropped due to intense competition.

Meanwhile the cost of local raw materials such as maize and rice polish had risen

Sri Lanka is one of the few remaining countries in the world that practices autarky and grain and cereal prices can go up when world prices fall, either due to weather or state controls.

But subsidiary Three Acre Farms which sells day old chicks said profits rose 210 percent to 67 million rupees, with a recovery in demand for day old chicks, helping reduce group losses.

Adam Investments confident of biz turnaround, more acquisitions on the cards

Company looks to grow on benefits from listing via Rs. 400 m IPO

Adam Investment Ltd. is in the market to raise Rs. 400 million to expand some of its high potential businesses and its Chairman was emphatic that the company was keen on growing via benefits from listing on the Colombo Stock Exchange.

With diversified interest via strategic investments and fully owned subsidiaries, Adam Investments Ltd., (AIL) is issuing 133.3 million shares at Rs. 3 each.

An investment holding venture, AIL has growing interests in apparel exports, IT/telecom/electronics, import trading, commodities, FMCG, construction, automotive and strategic equity investments.

It will use funds raised via the IPO to expand the IT sector/Electronics (Rs. 200 million), apparel (Rs. 100 million) and metal/construction (Rs. 50 million).

“We are interested in broad basing our shareholding, improving governance structure, enhance customer trust as well as access funds thereby benefit from being a stable listed company,” Adam Investments Ltd. Chairman Dr. Ali Asger Shabbir Gulamhussein told journalists yesterday.

Incorporated in 2011, AIL holds 39.8% in listed Orient Garments PLC, 10% in PC House Holdings PLC and 9% in Ceylon Foreign Trades PLC, in addition to 43% in Network Communications Ltd., 47% in Adam Metals Ltd. and 31% in Adam Apparels Ltd. In addition it has two 100% owned subsidiaries Adam Automobile Ltd., and Adam Air Conditions Ltd. 

Some of the companies such as Adam Metals and Adam Apparels have been in operation since the 1970s whilst NETCOM has been in operation since 2002 dealing with ICT products in addition to holding the license to operate external gateway for international communication and international simple voice resale.

AIL said existing investments and these companies coming under an investment holding company will strengthen all, allowing each company to strive in their respective sectors utilising synergies, reducing overheads and streamlining management practices and creating overall a sustainable environment for growth and excellence.

Gulamhussein cited a recent success of turning around Orient Garments PLC, which reported a profit of Rs. 113 million in the fourth quarter of FY14 up 864% from Rs. 13 million a year earlier following AIL gaining board control of the company in January 2014.

“We stopped and reversed a trend of losses over the last few quarters of 2013/14 and have now set the company on a steady course towards greater efficiency and effectiveness which are reflected in the bottom line,” said the AIL Chairman. The added advantage of its own exposure to apparel has helped AIL as well as the listed apparel subsidiary.

Since the acquisition, AIL has expanded its in-house designed apparel exports share to 20% and hopes to increase it to 40%. It has scaled up operations with the number of production lines increased from 29 to 57. Diversifying into non-traditional apparel buying markets is another focus.

AIL is also encouraged by the fact that investors have recognised the positive impact as Orient Garments’ share price has risen to Rs. 15, nearly 100% more than AIL paid for its 39.8% stake.

“We are a newly formed investment company which looks at investment, revival and management of a growing number of subsidiary companies as its core business. We look for value in our investments. We buy companies when their valuations are realistic and then by implementing sound internal procedures, systems, good governance and processes we gain higher efficiencies. These in turn translate in to greater profits by improving the spread between cost and revenue,” the AIL Chairman said.

“This is a disciplined and robust system which is inherent in our well seasoned director board. We endeavour to make all our investments this way and I am certain the market will be seeing more of this in the near future,” he added.

Commenting on market sentiments, managers and financial advisors to the issue Capital Trust Financial Ltd. Managing Director G. Ramanan (who is also incidentally a Non-Executive Independent Director of AIL) said the demand for fundamentally sound IPOs are good and there was an upswing in sentiments overall. He said AIL is attractive on forward price earnings ratio among other factors.
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LOLC buys 7% Seylan non-voting stake for Rs. 480 m

Lanka Orix Leasing Company PLC yesterday acquired a 7% non-voting stake in Seylan Bank PLC for Rs. 480 million.

The stake amounted to 11.988 million shares and was done at Rs. 40 per share. The seller was Browns Investments PLC, which is a subsidiary of LOLC Group and has several common directors.

With yesterday’s purchase LOLC’s non-voting stake in Seylan has risen to 41.68%. LOLC also has a 9.5% voting stake in Seylan whilst Brown and Company holds a 14% stake.
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More foreign buying on Expolanka

Expolanka Holdings Plc led foreign buying for the second consecutive day as the counter came under heavy trading.

Expolanka saw 23 million of its shares traded for Rs. 239 million. Net foreign buying amounted to 4.3 million shares worth Rs. 44.3 million. On Monday EXPO saw Rs. 117 million worth of foreign buying.

Softlogic Stockbrokers said EXPO which has enticed buying interest during the concluded 7 trading days has seen near 64 million shares (around 3% of the counter) in total being traded, as against its 12-month average daily share volume of 1.2 million shares.

Renewed activity has driven the counter from Rs. 9.50 to Rs. 10.30. However the counter witnessed slight selling pressure yesterday mainly among the widespread investor fraternity, where the counter shed ground marginally from its 52-week high of Rs. 10.80 on Friday to high of Rs. 10.50.

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Drought cuts March tea crop by 22%

Sri Lanka’s tea output fell for the second straight month in March, down 21.9% from a year earlier, data from the State-run Tea Board showed on Tuesday, which officials attributed to an extended drought condition.

Output of Sri Lanka’s top agricultural export commodity also fell 9.9% in the first quarter of this year compared with the same period last year.

The country’s annual tea production rose 4.2% last year to a record high of 340.2 million kg, surpassing its previous all-time peak of 331.4 million kg in 2010.

Earnings also hit a record of $ 1.54 billion last year, surpassing the previous high of $ 1.48 billion in 2011.

Tea is one of the main foreign currency earners for the country’s $ 67 billion economy.
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Sri Lanka Insurance sets fresh records

* Posts Rs. 6.35 b pre-tax profit in 2013 up by 10% over the previous year; post-tax profit of Rs. 4.6 b

* Rewards life policyholders with Rs. 4.4 b bonus bringing total for the past five years to Rs. 19 b and Rs. 25.7 b in nine years

* Leads industry with Combined Gross Written Premium of Rs. 21.36 b up 6% over 2012

Amidst stiff competition and industry challenges Sri Lanka Insurance Corporation (SLIC) has set fresh records in 2013 posting its highest ever pre-tax profit of Rs. 6.35 billion and rewarding its life policy holders with a Rs. 4.4 billion bonus.

The latest payout for life policy holders amounting to over 400,000 brings the total during the past five years to Rs. 19 billion and for the past nine years a staggering Rs. 25.7 billion.

In the highly competitive industry the Chairman and Board of Directors led by Upali Dharmadasa took pride in SLIC’s leadership in terms of Gross Written Premium of Rs. 21.36 billion, up by 5.84 over 2012. General insurance accounted for 61% and long term insurance (life) contributed 39%. The latter’s premium saw a 14% growth to Rs. 8.4 billion whilst general insurance amounted to Rs. 13 billion.

SLIC’s pre-tax profit reflected a 10% increase whilst post-tax profit was Rs. 4.6 billion.

“In GWP, profits and bonus declared as well as financial stability, SLIC remains the undisputed leader,” SLIC’s Managing Director Piyadasa Kudabalage told journalists last night at a ceremony held to make a token presentation of bonuses to select life policy holders.

The six SLIC life policy holders who received their bonus at the ceremony last night were S.H.U. Amarasekara, Dr. Wimal Wimalaratna, M.P.V.C. Cooray, M.A.L.G. Nethikumara, A.T. Matarage and N.K.N. Udaya kumara.

“In 2013 we remained the largest composite insurance provider and our performance during the year has re-affirmed our status as the most robust insurance company in the industry,” Kudabalage added. SLIC’s asset base was a staggering Rs. 143.5 billion, of which the Life Fund is Rs. 66.5 billion.

According to him, SLIC’s progressive business approach has enabled it to proactively benefit from the unfolding opportunities in post-war Sri Lanka and those to come in the future. “We are confident that our strategy will continue to accelerate the momentum of growth of SLI,” the Managing Director added.

“Combined value of bonuses declared by SLIC for life policy holders
2009 Rs. 3 billion
2010 Rs. 3.4 billion
2011 Rs. 4 billion
2012 Rs. 4.2 billion
2013 Rs. 4.4 billion”

Since 2010, SLI has pursued an aggressive diversification strategy to boost investment income and Kudabalage described it as a catalyst for the company’s growth in 2013. SLIC has investments in Litro Gas, Lanka Hospitals (formerly Apollo Hospital) and Hyatt Regency Colombo which is 475 room and 84 serviced apartment complex.

“Whilst the growth in our core business contributed towards greater profitability, we are aware of the contribution from SLIC’s diversified portfolio in achieving a consolidated profit that is unprecedented,” Kudabalage said.

He said SLIC Group turnover was Rs. 60 billion 2013 and profit amounted to Rs. 13.5 billion. 

“We will see further diversification and growth to ensure higher investment income and stability,” the Managing Director added.

Celebrating its 52nd year of operation, SLIC is the only insurer to be rated AAA by RAM Ratings and AA by Fitch Ratings. At the World Finance Awards in London, SLI had been adjudged the ‘Best Insurance Company in Sri Lanka’ in the years 2010, 2011, 2012 and 2013. It has over 120 branches and over one million policies in force.
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MBSL posts 6% revenue increase in 1st quarter 2014

The Merchant Bank of Sri Lanka PLC (MBSL) posted revenue of Rs. 598 million for the 1st quarter of the financial year 2014 as against Rs. 563 million during the corresponding quarter of last year.

The net interest income of MBSL recorded a growth of 18% from Rs. 206 million to Rs. 243 million in the three month period mainly from lease and hire purchase, term loans, microfinance and personal loans.

Interest expenses decreased from Rs. 343 million to Rs. 330 million for the same period, recording a marginal drop by 4%. This decrease mainly reflected due to overall interest rate reduction in the market.

Other comprehensive income for the period increased from Rs. 5.4 million to Rs. 15 million, this was due to fair value gained from financial assets available for sale.

The total assets of MBSL reached to Rs. 13.6 billion as at 31 March 2014, compared to Rs. 13 billion as at 31 March 2013 reflecting a growth of 4%. The growth in the company’s asset base is mainly represented by lease and hire purchase receivables and loans and advances to customers.

Furthermore, the overall portfolio increased from Rs. 9.7 billion to Rs. 10.2 billion over the base figures on 31 March, 2013. This was mainly due to the increase in corporate and retail credit activities. “We have successfully managed to improve our credit growth while maintaining strong capital adequacy ratio at 21.34 % at the end of 1st quarter 2014, which is well above the regulatory requirements,” MBSL CEO T. Mutugala said.

Merchant Bank of Sri Lanka PLC is planning to merge with MBSL Savings Bank Ltd. and MCSL Financial Services Ltd. and become a finance company. The latest move comes as a part of the latest financial sector consolidation plans laid out by the Central Bank of Sri Lanka. MBSL is a subsidiary coming under the state run banking giant Bank of Ceylon.
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