Tuesday 28 July 2015

JKL profit falls 20 pct in three months to June

Author CHAMATH ARIYADASA

(LBO) – Sri Lanka’s John Keells PLC (JKL.N), the tea and rubber broking unit of John Keells Holdings, announced a 20 percent drop in net profits in the first quarter, in provisional results released to the Colombo Stock Exchange.

The company said profit after tax fell to 54.2 million rupees from 67.7 million rupees in three months to June, on revenue which fell 18 percent to 188 million rupees.

The company noted that weak global tea and rubber prices could affect performance in the short term, in its annual report.

“The demand for tea could remain depressed in the short term due to issues across some of the key export destinations for Sri Lankan tea,” Chairman Susantha Ratnayake said.

The rubber industry too would be called upon “to demonstrate greater resilience in the near term,” he said.

The company earnings per share fell to 0.87 rupees in the quarter from 1.10 rupees in the same period last year. The share price closed at 93.50 rupees, up 0.54 percent, on Tuesday.

Sri Lanka’s tea exports, for the first five months from January to May 2015, declined 13 percent to 561 million US dollars compared with 644.4 million US dollars in the same period in 2014.

John Keells Stockbrokers also comes under the John Keells PLC wing.

Sri Lanka’s Cargills brands bolster June quarter profits

ECONOMYNEXT - Sri Lanka's Cargills (Ceylon) reported a net profit of 390.6 million rupees in the June 2015 quarter compared with a loss of 145 million rupees a year earlier with fast growth in branded products.

Earnings per share for the quarter were 1.74 rupees against a loss per share of 65 cents the previous year, a stock exchange filing said.

Group sales rose 9.0 percent to 17.1 billion rupees in the three months ended 30 June 2015 from a year ago.

Cargills Ceylon, part of the CT Holdings group, attributed revenue growth to the strong performance of its retail and Fast Moving Consumer Goods businesses.

“Improved consumer sentiment was evident from the beginning of the year,” the statement said.

“The FMCG sector has returned a stable performance with a 24.6 percent growth in turnover ending at 3.0 billion rupees.

“The double-digit growth reported by our agriculture and livestock processing businesses indicates category growth driven by our strong portfolio of national brands; ‘Kist’, ‘Goldi,’ ‘Sams’, ‘Magic’ and ‘Kotmale’.”

The group’s retail sector sales grew 5.7 percent to 13.4 billion rupees in the quarter.

But Cargills said the business “continued to be challenged by the ‘deemed’ Value-Added-Tax (VAT) imposed on VAT exempted products that are essential for daily nutrition and are sourced locally.

”Continuation of this arbitrary fiscal policy is contradictory to national efforts of encouraging local agriculture and production and has far reaching implications on smallholder farmers who have been empowered by the steady markets and guaranteed minimum prices benchmarked by the private supermarket industry.”

The statement said the group restructuring process with efforts to optimize resources and expertise while strengthening the balance sheet has “yielded the expected results leading to enhanced efficiency.”

Sri Lankan shares rise, hover near 2-month closing high

Sri Lankan shares rose on Tuesday, hovering near their two-month closing high hit on Friday, as expectations of strong corporate earnings and political stability after the parliamentary polls next month lifted investor sentiment.

The main stock index ended firmer 0.19 percent, or 13.84 points, at 7,261.07. On Friday, it had closed at its highest since May 25.

Gains were led by large caps such as John Keells Holdings Plc amid block deals. John Keells rose 0.67 percent, Ceylon Tobacco Company Plc 1.72 percent and Distilleries Company of Sri Lanka Plc gained 0.35 percent.

Turnover was 1.1 billion rupees ($8.23 million), just above this year's daily average of 1.07 billion rupees.

Foreign investors were net sellers of 212.8 million rupees worth of shares, extending the net foreign outflow so far this year to 549.3 million rupees.

Analysts expect local companies to post strong results for the April-June quarter. 

($1 = 133.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka Treasuries yields up across maturities

ECONOMYNEXT - Sri Lanka's Treasuries yields rose across maturities Wednesday with the 3-month yield up 03 basis points to 6.28 percent from a week earlier, data from the state debt office showed.

The 6-month yield rose 05 basis points to 6.43 percent and the 12-month yield rose 09 basis points to 6.48 percent.

The debt office sold 12.8 billion rupees of 03-month bills, 9.6 billion rupees of 6-month bills and 04 billion rupees of 12 month bills totalling 26.5 billion rupees.



Fitch places Ceylon Income Fund on negative rating

Fitch Ratings has placed the National Fund Credit Quality Rating assigned to the Ceylon Income Fund of ‘A(lka)’ on Rating Watch Negative.

There is uncertainty regarding the credit quality of a significant portion of the funds’ underlying assets,Fitch said.

This action comes after the Securities and Exchange Commission of Sri Lanka (SEC) did not renew the licence of Lanka Rating Agency (LRA), which rated 32% of Ceylon Income Fund’s assets as at end-May 2015.

The SEC on July 1,2015 issued a statement saying that LRA is not entitled to assess, evaluate or review the creditworthiness of listed securities or securities to be listed.

The fund’s Weighted Average Rating Factor was previously consistent with a National Fund Credit Quality Rating in the ‘A(lka)’ category.

The fund primarily invests in corporate debt instruments and is managed by Ceylon Asset Management.

The National Fund Volatility Rating is ‘V-NR’.

The Rating Watch Negative will be resolved if the assets that were previously rated by LRA reduce materially or if these assets are rated by another rating agency.

Fitch will review the Rating Watch in one month’s time.
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Fitch rates PABC senior debt final ‘BBB(lka)’

Fitch Ratings has assigned Pan Asia Banking Corporation (PABC) issue of senior unsecured debentures of up to Rs 4.0b a final National Long-Term rating of ‘BBB(lka)’

The final rating is the same as the expected rating assigned on June 17, 2015, and follows the receipt of documents conforming to information already received.

The debentures will have maturities of three and four years with a combination of fixed-rate and floating-rate coupons. PABC expects to use the proceeds to reduce structural maturity mismatches, diversify the funding mix and secure medium-term funding.

The debentures are to be listed on the Colombo Stock Exchange.
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After Cairn exit global giant Total, Shell and ExxonMobil want to explore Lankan oil

Following the exit of Cairn India from offshore oil exploration in Sri Lanka’s Mannar basin, three major oil companies have expressed interest in continuing Cairn’s work.

Power and Energy Ministry Secretary B.M.S. Batagoda said bids had been received from three global oil companies - Total, Shell and ExxonMobil - for exploration in the Mannar Basin.

The bids had been received after an open tender was called when Cairns Lanka decided to end its operations in Sri Lanka.

Cairn Lanka, a subsidiary of Cairn India Ltd. (CIL), one of the leading independent exploration and production companies globally, announced in April that a nearly 50% drop in crude oil prices had forced Cairn India to exit its operations in Sri Lanka.

Following Cabinet approval, the Government has floated bids to select an investor to commercially develop the natural gas deposits found in the two wells of block SL 2007-01-001 in the Mannar Basin.

According to Dr. Batagoda, the two wells in the basin had yielded two trillion cubic meters of natural gas which would be sufficient to meet the demand of the country for ten years. Furthermore, the natural gas would be used to run the power plants at Kerawalapitya and Kelanitissa

The new tender will be awarded for 20 blocks in the Mannar basin while a separate tender will be called for work on the data obtained by Cairns during its exploration.

Meanwhile, the Cabinet has decided to give the tender for the exploration for oil and natural gas off the eastern coast of Sri Lanka to Total, a leading French company, the Sunday Times reported.

The company will gain exclusive rights for scanning, data collection and mapping in the seas off the eastern coast.

Dr. Batagoda said that this would be the first time that gas and oil exploration will take place in the eastern seas. 
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