Hayleys records turnover of Rs.103Bn for six months ending September

LBO - Hayleys PLC, a diversified conglomerate posted a 65 percent Year-on-Year (YoY) increase in turnover up to 103 billion rupees for the six months period ending 30 September 2018.

The Group posted strong operating profits which expanded to 6.8 billion rupees from 3.2 billion rupees in the corresponding period.

The Group incurred an increased net finance cost of 5 billion rupees, mainly due to the inclusion of Singer Group, financing costs of the recent acquisitions and exchange rate fluctuation.

However, the Group Profit Before Tax (PBT) for the period improved to 1.8 billion rupees from 1.4 billion rupees in 1HFY18/19 while Profit After Tax (PAT) also improved to 769 million rupees from 719 million rupees.

All segments except for Plantations have contributed to the healthy expansion in turnover for the Group during the period in review. Revenue within the Consumer & Retail segment expanded substantially from 2.7 billion rupees to 31.5 billion rupees in 1HFY18/19, bolstered by the contributions of Singer (Sri Lanka) Group which were acquired by Hayleys at end of 2Q18, generating 2.4 billion rupees in operating profits.

Commenting on the Group’s performance over the first half, Hayleys PLC Chairman and Chief Executive, Mohan Pandithage said: “The Group was able to achieve significant growth driven by the investments we have made towards the acquisition of Singer (Sri Lanka),where the Consumer & Retail sector has spearheaded the improvement of the topline during 1HFY18/19.”

“While anticipating further improvement of results from this sector , Group’s continuous investments and efforts to improve quality and efficiency through well-placed processes across every business sector will yield greater results for Hayleys PLC in the future.”

During the first half, the Group’s Transportation & Logistics segment, supported by its recent acquisitions, posted a turnover of Rs. 22.7 billion, as compared with Rs. 16.4 billion in the previous period, leading to an operating profit of Rs. 1.4 billion, from a previous Rs. 1.1 billion.

Turnover in the Group’s Eco Solutions segment rose from Rs. 2.1 billion to Rs. 3.4 billion while operating profits of the sector rose significantly from Rs. 70 million to Rs. 193 million. Meanwhile, turnover in the Group’s Purification Products segment expanded from Rs. 7.1 billion to Rs. 9 billion while operating profits increased from Rs. 358 million to Rs. 614 million. Similarly, the Group’s Hand Protection segment posted revenue of Rs. 8.4 billion, against a previous Rs. 8 billion and operating profits rising significantly to Rs. 521million, as compared with Rs. 98 million in 1HFY18/19.

The Agriculture sector’s turnover expanded to Rs. 5.8 billion, as compared with Rs. 5.5 billion, while operating profits improving to Rs.462 million from Rs.234 million in the corresponding period.Following a series of climate-impacted yields, Sri Lanka’s Agricultural sector is forecast to rebound in the Maha season with the timely rains experienced in the past few weeks which augurs well for the Hayleys Agriculture sector.

Poor weather conditions and world market prices have hampered the Plantations sector, resulting in reduced turnover and operating profits, which ended the first half at Rs. 6.4 billion, and Rs. 29 million respectively.

Hayleys Global Beverages (Pvt) Ltd (HGBL), a unit of diversified conglomerate Hayleys PLC announced a joint venture partnership with Germany’s botanicals giant Martin Bauer Group (BMG). With the demand for tea and herbal ingredients forecasted to grow, this collaboration is expected to harness the immense potential of HGBL for the Group.

Commercial Bank weathers external challenges to post strong 9-month results

Sri Lanka’s benchmark private bank, Commercial Bank of Ceylon PLC has demonstrated its resilience in adverse conditions, weathering the twin challenges of high taxes and impairment charges to post a healthy growth in most key performance indicators at the end of the third quarter of 2018.

The Bank’s gross income surpassed the Rs 100 billion mark in nine months for the first time growing by 21.61% to Rs 102.841 billion, with interest income improving by a robust 17.39% to Rs 88.825 billion on the back of a strong loan book growth. Interest expenses increased at a lower rate of 12.09% to Rs 53.160 billion, due to timely re-pricing of liabilities despite a substantial increase in deposits. Notably, both deposits and loans have recorded YoY growth of more than Rs 125 billion.

Net interest income for the nine months at Rs 35.666 billion represented an improvement of Rs 7.424 billion or 26.29%. Incidentally, net interest income accounted for 73.81% of the total operating income of the Bank.

The Bank reported a 17.85% improvement in net fees and commission income, amounting to Rs 7.249 billion for the nine months and representing 15% of the total operating income. Other income, including exchange profit, recoveries of loans written off/provided for and net gains/losses from trading and financial instruments, grew by a remarkable 244.56% to Rs 5.406 billion. The growth in the exchange profit of the Bank was mainly due to revaluation of foreign currency assets consequent to the depreciation of the Rupee against major currencies. However, the Bank reported a loss of Rs 1.442 billion on trading, as against a profit of Rs 351 million last year, mainly due to losses suffered on matured SWAPs during the period.

As a result, the total operating income of Rs 48.321 billion for the nine months ending 30th September 2018 reflected a growth of 34.37% over the corresponding period of last year.

The prevailing weak market conditions resulted in an increase in non-performing loans and advances, pushing the total impairment charges for loans and other losses for the period under review to Rs 6.864 billion from Rs 1.494 billion for the first nine months of 2017. Consequently, the growth of the net operating income was hampered, restricting it to 20.28% to reach Rs 41.456 billion.

Operating expenses at Rs 17.189 billion for the period, reflected the Bank’s success in managing its overheads with an increase of 16.54% despite salary increments and the costs of expansion. As a result, the Bank reported a profit before VAT and NBT of Rs 24.267 billion for the nine months, an improvement of 23.07%. The VAT and NBT on Financial Services for the period amounted to Rs. 4.213 billion compared to Rs. 3.486 billion paid in the corresponding period last year, reflecting an increase of 20.86%.

The Bank’s filing with the Colombo Stock Exchange (CSE) reported that profit before income tax grew 23.55% to Rs 20.054 billion as at 30th September 2018. The Bank disclosed that income tax had increased by 38.09% to Rs 6.293 billion for the nine months compared to Rs. 4.557 billion in the corresponding period last year, primarily due to the removal of most of the income tax exemptions enjoyed by the banking industry with the introduction of the new Inland Revenue Act which became effective from April 01, 2018.

Consequently, the Bank’s net profit after tax for the nine months improved by Rs 2.086 billion or 17.87% to Rs 13.761 billion, while the profit after tax of Rs 5.115 billion for third quarter, recorded an improvement of 23.71% over the corresponding quarter of 2017, despite a rise in impairment provisions and escalating tax expenses.

Commenting on these results, Commercial Bank Chairman Mr Dharma Dheerasinghe said: “Our nine-month performance reflects the vagaries of the period, with the Bank overcoming the challenges of slower business growth through a combination of prudent banking practices and agile responses to changing conditions. We expect conditions to be even more challenging in the fourth quarter, but are confident of weathering them in our own way.”

The Bank’s Managing Director/CEO Mr S. Renganathan said: “Rising NPL ratios are a concern for the entire industry, and are compelling Banks to increase provisioning for bad debts. In the case of Commercial Bank, NPL ratios are still lower than industry averages, and timely re-pricing of liabilities and strong deposit growth have enabled the Bank to keep interest expenditure growth to a significantly lower rate than interest income growth. Nevertheless, the contribution of net interest income to operating income has declined, indicating that fund-based operations of the Bank are now contributing substantially to income. We are proud that the Bank amidst many challenges has been able to maintain a consistent growth in its performance in all key areas. ”

Total assets of the Bank grew by Rs 98.257 billion or 8.59% over the nine months to reach Rs 1.242 trillion as at 30th September 2018. Asset growth over the preceding 12 months totalled Rs 142.645 billion, reflecting YoY growth of 12.98%.

Gross loans and receivables from customers increased by Rs 102.511 billion or 13.58% since 31st December 2017 to Rs 857.219 billion at the end of the third quarter, recording an average increase of over Rs 11 billion per month. The increase over the preceding 12 months was Rs 132.388 billion, reflecting YOY growth of 18.26%.

The Bank’s deposits increased to Rs 943.615 billion in the period reviewed, growing by 11% or Rs 93.488 billion since 31st December 2017, at a monthly average of more than Rs 10 billion. Deposit growth over the 12 months from 30th September 2017 totalled Rs 125.051 billion, recording YoY growth of 15.28%.

In other key indicators, the Bank’s gross and net NPL ratios stood at 2.83% and 1.68% respectively from 2.02% and 1.00% a year ago, due to the increase in non-performing loans. The interest margin continued to improve, from 3.62% in 2017, to 4% for the nine months reviewed.

The Bank’s Tier 1 capital ratio at 11.390% as at 30th September 2018 was well above the 8.875% required under Basel III, while the Total capital ratio of 15.820% for the period was also comfortably above the Basel III requirement of 12.875%. The required capital ratios are due to increase to 10% for Tier I and 14% for Total capital ratio from January 2019.
Return on assets (before tax) improved to 2.25% for the nine months reviewed, from 2.15% for 2017 while the Return on equity stood at 16.22% at the end of the third quarter, a marginal drop due to an increase in the shareholder funds. The net assets value per share increased to Rs 118.43 at the end of the review period from Rs. 107.54 as at end 2017.

At Group level, Commercial Bank, its subsidiaries and associates reported profit before tax of Rs 20.098 billion for the nine months, an improvement of 22.50%. Profit after tax for the period grew by 16.93% to Rs 13.767 billion.

The only Sri Lankan Bank to be ranked among the world’s top 1000 banks for eight years consecutively, Commercial Bank operates a network of 263 branches and 800 ATMs in Sri Lanka. The Bank has won multiple awards both local and international in 2017 and 20 international awards in the first eight months of 2018.

Commercial Bank’s overseas operations encompass Bangladesh, where the Bank operates 19 outlets; Myanmar, where it has a Representative Office in Yangon and a Microfinance company in Nay PyiTaw; and the Maldives, where the Bank has a fully-fledged Tier I Bank with a majority stake.

(Media Release)

Sri Lanka's Sampath Bank Sep net slightly down on NPLs

ECONOMYNEXT - Despite improving interest margins, profits at Sri Lanka's Sampath Bank Plc fell a marginal 0.8 percent from a year earlier to 2.88 billion rupees in the September 2018 quarter on higher provisioning for bad loans and trading losses, interim results showed.

The bank reported earnings of 10.90 rupees a share in the quarter. In the nine months to end September, earnings were 37.52 rupees a share on a profit of 9.9 billion rupees, up 13.2 percent from a year earlier, accounts filed with Colombo Stock Exchange showed.

The banking stock was trading 1 rupee higher at 233 rupees on Tuesday.

In the quarter, net interest income grew 31.2 percent from a year earlier to 10.22 billion rupees as interest income increased 19.4 percent to 26.3 billion rupees and interest costs grew a slower 12.9 percent to 16 billion rupees.

Net fees and commission incomes grew 23.2 percent to 2.6 billion rupees.

The bank reported a trading loss of 1.2 billion rupees in the quarter, down from a profit of 251 million rupees a year earlier.

Other operating income rose 350 percent to 2.9 billion rupees.

Bad loans provisioning surged 383.5 percent to 3.94 billion rupees due to the adoption of strict accounting standards and non-performing loans rising.

Gross non-performing loans were 4.25 percent of total loans at end September 2018, up from 1.64 percent nine months earlier.

Operating expenses rose 8.5 percent to 5 billion rupees which includes personnel costs of 2.3 billion rupees, down a marginal 0.5 percent a year earlier.

Sampath Bank's loan book expanded 12.2 percent from nine months earlier to 658 billion rupees at end December 2017 while deposits grew 7.3 percent to 680.8 billion rupees.

The banking group's interest margin improved to 4.27 percent in this period, up from 3.91 percent nine months earlier.

The bank's Tier I capital adequacy ratio was 11.67 percent at end September 2018, up from 10.21 percent nine months earlier and above the minimum Basel III regulatory requirement of 8.875 percent.

Total capital adequacy was at 15.61 percent, up from 14.33 percent nine months earlier and above the regulatory minimum of 12.875 percent.

Sri Lanka poultry firm profits up with demand recovery

ECONOMYNEXT - Sri Lanka's Three Acre Farms Plc, a poultry firm, said profits for the September quarter doubled from a year earlier to 213.9 million rupees with a recovery in market demand for eggs and chicken.

"The Group revenue has increased as a result of improved demand for Layer Day Old Chicks (DOC) due to the recovery of table egg market and the stable market conditions for Broiler DOCs during the quarter under review," Director/Chief Executive Cheng Chih Kwong, Primus told shareholders.

"The Group’s margin has positively been driven by increased revenue due to effective farm management in Breeder and Commercial farms."

The firm reported earnings of 9.09 rupees per for the quarter, interim accounted filed at the Colombo Stock Exchange showed. For the first nine months of the year, earnings were 22.51 rupees per share, with net profits up 15 percent from a year earlier to 530 million rupees.

The firm's share was up 6 rupees to 106 rupees in intraday trading.

Revenue for the September quarter grew 22 percent from a year earlier to 677 million rupees while cost of sales were up 9 percent to 471.1 million rupees, leading to gross profits growing 70 percent to 205.8 million rupees.

Finance income grew 98 percent to 53.8 million rupees.

Sri Lanka's Royal Ceramics Sep net down 35-pct on rising costs

ECONOMYNEXT - Profits at Sri Lanka's listed Royal Ceramics fell 35 percent to 440.5 million rupees in the September 2018 quarter on rising interest expenses and higher production and distribution costs, interim accounts showed.

Earnings were 3.98 rupees a share in the quarter. For the six months to end September 2018, earnings were 7.12 rupees a share on a profit of 789.2 million rupees, down 34 percent from a year earlier, accounts filed with the Colombo Stock Exchange showed.

Royal Ceramics, a unit of listed Vallibel One Plc, was trading 2 rupees lower at 75 rupees.

In the quarter, revenue grew 10 percent from a year earlier to 8.3 billion rupees while cost of sales grew a faster 26 percent to 5 billion rupees which contracted gross profits by 13 percent to 2.4 billion rupees.

Distribution costs rose 26 percent to 1.1 billion rupees and administrative expenses rose 24 percent to 471 million rupees.

Net finance cost increased 52 percent to 463 million rupees.

Borrowings had increased 21 percent from six months to earlier to 18.3 billion rupees at end September.

-Listed Subsidiaries-

Royal Ceramics has two listed subsidiaries, Lanka Ceramics Plc and Lanka Walltiles Plc.

Profits at Lanka Walltiles Plc fell 80 percent from a year earlier to 82 million rupees in the September quarter.

Earnings per share was recorded at 1.58 rupees in the quarter. In the six months to end September earnings were 2.45 rupees a share on a profit of 125.2 million rupees, down 75 percent from a year earlier, interim accounts filed with the Colombo Stock Exchange showed.

Lanka Walltiles was trading 2.90 rupees lower at 72 rupees.

In the quarter, revenue grew 11 percent to 4.8 billion rupees but cost of sales grew a faster 29 percent to 3.8 billion rupees, leading to a 26 percent decline in gross profits to 1 billion rupees.

Distribution expenses rose 27 percent to 491 million rupees, administrative costs rose 27 percent to 293 million rupees and finance costs soared 116 percent to 192 million rupees.

Profits at Lanka Ceramic fell 91 percent from a year earlier to 11.8 million rupees in the September quarter as revenues fell 4 percent to 45.4 million rupees and cost of sales grew 7 percent to 26.5 million rupees.

Profits were impacted by other incomes falling 92 percent from a year ago to 10 million rupees.

Lanka Ceramic last traded at 132.50 rupees.

Sri Lankan rupee hits record low amid political uncertainty

Reuters: ** The Sri Lankan rupee fell to a record low of 176.15 to the U.S. dollar on Tuesday, surpassing the 175.90 hit in the previous session, amid political uncertainty triggered by President Maithripala Sirisena's decision to dissolve parliament.

** Stocks closed higher, led by John Keells Holdings, a day after the conglomerate announced a share buyback.

** However, after the market closed, the Supreme Court stayed Sirisena's decision to dissolve parliament until next month in a further twist in the country's political crisis.

** The rupee ended at 176.05/30 per dollar on Tuesday, compared with the previous close of 175.60/75. It has weakened more than 1.7 percent since the political crisis began on Oct. 26 and more than 14.7 percent so far this year.

** Foreigners bought a net 53.8 million worth stocks on Tuesday, but have offloaded equities worth 7.7 billion rupees since the political crisis started on Oct. 26.

** The bond market saw outflows of about 21 billion rupeesbetween Oct. 25 and Nov. 7, central bank data showed. This year, there have been 17.2 billion rupees of outflows from stocks and 110.8 billion rupees from government securities, bourse and central bank data showed. 

** The Colombo stock index rose 0.21 percent to 5,993.54 after falling 1.9 percent last week. Heavy retail investor buying had lifted it 4.5 percent in the week befoe. It has slipped over 6 percent so far this year. 

** Stock market turnover was 6.7 billion rupees ($38.09 million) on Tuesday, well above this year's daily average of 846.9 million rupees.

($1 = 175.9000 Sri Lankan rupees)

Sri Lanka’s LVL Energy Sept quarter net profit up 25-pct

ECONOMYNEXT - Sri Lanka’s LVL Energy Fund, which operates hydro, wind and thermal power plants, said net profit rose 25 percent to 223 million rupees in the September 2018 quarter from a year ago.

Sales rose 9.4 percent to 139 million rupees over the same period, according to interim accounts filed with the stock exchange.

Earnings per share for the quarter were 38 cents. LVL Energy Fund’s share last traded unchanged Monday at 8.10 rupees.

EPS for the six months to September 2018 was 75 cents with net profit up 37 percent to 435 million rupees.

A statement said LVL Energy Fund’s six-month profit exceeds profit of 439 million rupees for the entire financial year ended 31st March 2018.

“The company’s hydro power plants performed strongly under favourable weather conditions during the period compared to the corresponding period last year,” it said.

“Power generation of wind power plants during the period was less than in the previous year due to less favourable weather conditions. “

Its thermal power plants in Bangladesh also recorded better performance during the period compared to the previous year.

The share of profit from Bambabarapana hydro power plant that commenced commercial operation in the last quarter of the previous financial year also contributed towards a higher group profit for the period.

LVL Energy Fund is a subsidiary of Lanka Ventures PLC. It operates seven hydro power projects in Sri Lanka with a total capacity of 19.4 MW and two wind power projects with an installed capacity of 15.3 MW in Kalpitiya.