By Hiran H.Senewiratne
Most of the Colombo Stock Exchange listed companies' net profits have come down by more than 6 percent. The reason behind this development is that people's disposable income has come down this year. Consequently, companies have been affected where business volume growth is concerned, stock market analysts said.
"Listed companies saw total net profits sliding 6.2 percent year-on-year to Rs 47.7 billion in the month of September quarter.This was because the disposable income of most people came down significantly. That affected the volume growth in many companies, president of the Colombo Stock Brokers Association Ravi Abeysuriya told The Island Financial Review.
Some analysts said that there are many reasons for profits to come down in many listed companies. They said corporate earnings in 2015 were driven by the boom in consumer demand, which was, in turn, stimulated by lower interest rates, benign inflation and fiscal stimulus extended by way of lower taxes and higher public sector salaries.
Abyesuriya said that some companies adopted a wait and see approach until the budget but the banking sector will be affected from next year with certain tax restrictions coming in.
Third quarter earnings demonstrate a reversal of the growth trend in corporate earnings as second (June) quarter earnings grew by a healthy 10.7 percent year on year.According to stock brokers the total earnings of many listed companies in the September quarter came down. Lanka IOC PLC, Carson Cumberbatch PLC and Bukit Darah PLC incurred heavy losses of Rs.373 million, Rs.497 million and Rs.1 billion respectively. However, the growth trend of the early quarters will soon reverse as consumer demand growth is expected to slow down amid tightening credit due to rising interest rates, increase in inflation and higher taxes which will taper people’s disposable income.
Most of the Colombo Stock Exchange listed companies' net profits have come down by more than 6 percent. The reason behind this development is that people's disposable income has come down this year. Consequently, companies have been affected where business volume growth is concerned, stock market analysts said.
"Listed companies saw total net profits sliding 6.2 percent year-on-year to Rs 47.7 billion in the month of September quarter.This was because the disposable income of most people came down significantly. That affected the volume growth in many companies, president of the Colombo Stock Brokers Association Ravi Abeysuriya told The Island Financial Review.
Some analysts said that there are many reasons for profits to come down in many listed companies. They said corporate earnings in 2015 were driven by the boom in consumer demand, which was, in turn, stimulated by lower interest rates, benign inflation and fiscal stimulus extended by way of lower taxes and higher public sector salaries.
Abyesuriya said that some companies adopted a wait and see approach until the budget but the banking sector will be affected from next year with certain tax restrictions coming in.
Third quarter earnings demonstrate a reversal of the growth trend in corporate earnings as second (June) quarter earnings grew by a healthy 10.7 percent year on year.According to stock brokers the total earnings of many listed companies in the September quarter came down. Lanka IOC PLC, Carson Cumberbatch PLC and Bukit Darah PLC incurred heavy losses of Rs.373 million, Rs.497 million and Rs.1 billion respectively. However, the growth trend of the early quarters will soon reverse as consumer demand growth is expected to slow down amid tightening credit due to rising interest rates, increase in inflation and higher taxes which will taper people’s disposable income.
The largest individual contributors to September quarter earnings were John Keels Holdings, Ceylon Tobacco, Commercial Bank and Hatton National Bank, with 7.3 percent, 6.9 percent, 6.8 percent and 5.6 percent respectively. The sector-wise highest contributors were, banking, finance and insurance (BFI) sector with a 43 percent share, followed by beverage, food and tobacco (BFT) with 19 percent and diversified holdings with a 13 percent share.
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