Sri Lanka tiles industry Sept quarter profits up, sales stagnant

ECONOMYNEXT – Two Sri Lankan tile manufacturers under Lanka Ceramics group controlled by Royal Ceramics have reported double-digit profit growth for the September 2015 quarter compared with a year ago despite falling or stagnant sales as costs fell.

Net profit of Lanka Tiles rose 27 percent to 275 million rupees in the quarter from a year ago, according to interim results filed with the stock exchange.

Gross sales fell 4.8 percent to 1.4 billion rupees with exports down by almost half to 45 million rupees while local sales also fell 2.2 percent to 1.37 billion rupees.

The accounts showed costs fell sharply. Lanka Tiles said earnings peer share for the September quarter rose to 5.19 rupees from 4.10 rupees a year ago.

For the six months ending September 2015, EPS rose 39 percent to 8.88 rupees.

Lanka Walltile said net profit rose 15 percent to 306 million rupees in the September 2015 quarter from a year ago.

Sales were stagnant but costs fell. EPS for the quarter rose to 5.60 rupees from 4.88 the year before.

For the six months ending September 2015, net profit rose 20 percent to 482 million rupees with EPS rising to 8.89 rupees from 7.30 rupees.

Sri Lankan manufacturers are benefitting from lower energy and finance costs with lower interest rates and inflation in the island.

Lanka Ceramics, which controls the two tile firms, said September 2015 quarter net profit rose almost 21 percent to 205 million rupees from a year ago. EPS rose to 6.83 rupees from 5.68 rupees.

Quarter revenue was stagnant at 3.77 billion rupees but costs fell.

In the six months ending September EPS of Lanka Ceramics rose to 11.10 rupees from 8.53 rupees the year before.

Profits from its tile units rose by half and that from its packaging materials and aluminium subsidiaries products grew while plantations suffered a loss. (Colombo/November 04 2015)

Sri Lanka shares snap 4-session losing streak

Reuters: Sri Lankan stocks edged up on Wednesday, reversing a four-session losing streak, led by blue chips but volume was thin as investors awaited a key government policy statement.

The main stock index ended 0.05 percent higher at 7,003.57, edging up from its lowest close since July 13 hit in the previous session.

The day's turnover was 547.9 million rupees ($3.88 million), around half of this year's daily average of 1.1 billion rupees.

Prime Minister Ranil Wickremesinghe is expected to announce the country's medium-term economic policy framework on Nov. 5, outlining the government's economic priorities ahead of the 2016 budget scheduled for Nov. 20.

"Investor confidence is not that great. Everybody is waiting for the prime minister's statement tomorrow," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

Analysts said investors are also waiting for the budget scheduled for Nov. 20.

Shares in Dialog Axiata Plc rose 2.70 percent while conglomerate John Keells Holdings Plc gained 1.07 percent.

However, foreign investors were net sellers of 63.9 million rupees worth of shares on Wednesday, extending the year-to-date net outflow to 3.73 billion rupees worth of equities. 

($1 = 141.3000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka Chevron lubricants unit profits up 11 pct

(LBO) – Sri Lanka’s Chevron Lubricants Lanka Plc said profits in the September quarter rose 11 percent to 834 million rupees from a year earlier despite the shrinking of oil prices locally and globally.

Chevron Lubricants Lanka PLC carries on the business of importing, blending, distributing and marketing of lubricant oils and greases.

The firm reported earnings of 6.96 rupees per share compared to 6.25 rupees per share in the same quarter last year in interim accounts filed with the Colombo Stock Exchange showed.

In the September quarter revenues fell 3 percent to 2.99 billion rupees, cost of sales also fell 11 percent to 1.62 billion rupees and gross profits increased 9 percent to 1.37 billion rupees.

Finance income of 48 million rupees, was up 90 percent a year earlier.

Sri Lanka's Treasuries yields drop

ECONOMYNEXT - Sri Lanka's Treasuries yields dropped across maturities at Wednesday's auction with the three month yield dropping 17 basis points to 6.44 percent, data from the state debt office showed.

The 6-month month yield dropped 12 basis points to 6.87 percent and the 12-month yield dropped 06 basis points to 7.00 percent.

The debt office accepted 6.0 billion rupees of 3-month bills, 16 billion rupees of 6-month bill and 3.5 billion rupees of 12-month bills, totalling 25.5 billion rupees.

ICRA Lanka assigns A+ rating for Access debenture issue

(LBO) – ICRA Lanka has assigned a rating of A+ with a stable outlook for the proposed 5 billion rupees debenture issue of Access Engineering.

The rating announcement is reproduced below.

ICRA Lanka has assigned a rating of [SL]A+ (pronounced S L A plus1) with a stable outlook to the proposed LKR 3,000 Mn (with option for the amount to be increased to LKR 5,000 Mn) Senior unsecured debenture programme of Access Engineering Plc (“AEL”/ “the Company”). ICRA Lanka also has an Issuer rating of [SL]A+ outstanding on AEL with stable outlook.

While assigning the rating, ICRA Lanka has taken a consolidated view on Access Engineering Plc and its subsidiaries as whole, given the operational and financial linkages among them. The assigned rating takes into consideration the longstanding track record and established position of the Access group as a leading Engineering, Procurement and Construction (EPC) contractor in Sri Lanka.

AEL has sizable experience in the design and construction of Roads & Bridges, Medium-Rise Buildings segments, as well as foundations & sub-ground work for high-rise buildings. Further, it also has varied experience of undertaking EPC works in segments such as water resources, telecommunications, ports, airports, etc. The rating also takes into consideration the professional management team of the company supported by SAP Enterprise Resource Planning system which aids it in real-time project tracking and implementation. These apart, the rating also factors in AEL’s healthy financial profile backed by its comfortable profitability and debt-free capital structure.

The rating, however, is constrained by the modest size of AEL’s current order backlog of Rs. 24, 000 Mn of ongoing projects as well as the high concentration in the order-book in terms of exposure to few projects, segments and customers. The competitive pressure in the construction industry, particularly for government projects, and the prevailing macro uncertainty within the sector, act as key rating sensitivities for AEL.

ICRA Lanka also notes that, though the gearing and coverage indicators have been healthy in the past, the working capital requirements are sizable and could expose AEL to liquidity risk in case of increasing commitments towards larger projects and increasing scale of operations. To an extent, ICRA expects this liquidity risk to be mitigated over the next 12-18 months period on the back of the proposed fund raising programme2, which would ease AEL’s access to funds for its working capital requirements. Further, any change in government policy towards the construction sector would impact AEL, as the company is reliant on government orders; further, expansion into overseas markets or other sectors could increase the overall risk profile of the group, given it limited experience in such business operations.

Company Profile

Access Engineering PLC (AEL) started its operations in 2001 as the Engineering, Procurement & Construction arm of the Access Group. Over the last 14 years, AEL has become one of the leading players in the Civil Engineering and Construction industry of Sri Lanka.

The Company was listed in the Colombo Stock Exchange in March 2012 following an initial public offering. Since then, AEL has grown sizably with acquisitions of businesses, and through expanding its presence in construction, real estate and othersegments. In February 2012, Access Engineering acquired Sathosa Motors PLC (Sathosa), which holds the franchise for Isuzu commercial vehicles. Also, Sathosa’s subsidiary – SML Frontier Automotive (Pvt.) Ltd. –is the sole agent for Land Rover in Sri Lanka. This apart, Access Realties (Private) Limited, which owns a commercial office property – ‘Access Towers’ – and its subsidiary, Access Realties 2 (Private) Limited, which is developing another commercial property – “Access Tower II”, are fully-owned subsidiaries. In September 2013, the Company formed a joint venture, ZPMC Lanka Company (Private) Limited with Shanghai Zhenhua Heavy Industries Company Limited (ZPMC) of China, a large container handling equipment manufacturer, to repair and maintain container handling equipment in the Colombo port. These apart, recently, in June 2015, AEL acquired 100% shareholding in Horizon Holdings Ventures (Pvt.) Limited and 50% shareholding in Horizon Holdings (Pvt.) Limited. These companies are in the business of developing their property located in Malabe over an extent of 12.5 Acres. These acquisitions are expected to further enhance AEL’s footprints in the property development sector.

Promoted by Mr. Sumal Perera, Mr. Christopher Joshua, and Mr. Ranjan Gomez, the Access group has presence in telecom, healthcare, power & renewable energy, and information technology also in addition to the aforesaid businesses under AEL and its subsidiaries.

For the FYE Mar-15, on a consolidated basis, AEL reported a net profit of LKR 2,423.9 Million on a revenue of LKR 16,514.1 Million as compared to a net profit of LKR 2,901.5 Million reported on a revenue of LKR 16,373.3 Million in FYE Mar-14.

For the Q1 FYE Mar-16, on a consolidated basis, AEL reported a net profit of LKR 637.3 Million on revenue of 4,207.3 Million.

Sri Lanka DFCC Bank's debentures get 'AA-(lka)( EXP)' Fitch rating

ECONOMYNEXT - Fitch Ratings said it has assigned DFCC Bank PLC's proposed senior unsecured debentures of up to 10 billion rupees an expected National Long-Term Rating of 'AA-(lka)(EXP)'.

The proposed debentures, which will have tenors of four and six years and carry fixed and floating coupons, will be listed on the Colombo Stock Exchange, a statement said.

DFCC expects to use the proceeds to reduce asset and liability maturity mismatches.

The final rating is subject to the receipt of final documentation conforming to information already received, Fitch said.

“The proposed senior debentures are rated in line with DFCC's National Long-Term Rating. The issues rank equally with the claims of the bank's other senior unsecured creditors,” it said.

“DFCC's rating is driven by its high capitalisation and its developing commercial banking franchise.”

The ratings on the proposed debentures will move in tandem with DFCC's National Long-Term Rating, Fitch said.

“A rating upgrade for DFCC would be contingent on the bank achieving a significantly stronger commercial banking franchise while maintaining strong credit metrics,” the statement said.

“DFCC's rating could be downgraded if there is a sustained and substantial increase in risk appetite that could materially weaken its strong capital position.”

Sri Lanka Talawakelle Tea makes Sept quarter loss

ECONOMYNEXT – Talawakelle Tea Estates PLC, part of Sri Lanka’s Hayleys group, slipped into the red in the September 2015 quarter owing to the prolonged slump in tea prices.

The firm made a loss of two million rupees in the latest quarter against a profit of 18 million rupees the year before, interims accounts filed with the Colombo stock exchange showed.

Sales for the quarter fell 14 percent to 865 million rupees from the year before.

Talawakelle Tea made a loss per share of nine cents in the September quarter. Earnings per share for the six months ending September 2015 were 32 cents compared with EPS of 2.42 rupees a year ago.