By Hiyal Biyagamage, Mario Andree and Rishar Saleem
Ceylon FT: Cumulative earnings of 267 of the 291 companies listed on the Colombo Stock Exchange fell 4.2% during the year 2013, an analysis of earnings data showed, despite the government expecting economic growth to reach 7.3% for that year.
Total earnings for 2013 were down to Rs 129.3 billion, from Rs 134.9 billion in the previous year, 2012.
High interest rates, inflation, rising energy, raw materials and wage costs weighed down earnings of the corporate sector.
Banking sector earnings fell 3.69% to Rs 48.54 billion, down from Rs 50.4 billion a year ago. Beverage sector earnings grew 5.05% to Rs 20.94 billion, up from Rs 19.93 billion a year ago.
Diversified sector earnings fell 26.08% to Rs 13.3 billion, down from Rs 17.99 billion a year ago and Telecommunication earnings grew 6.72% to Rs 10.62 billion, up from Rs 9.95 billion a year ago.
Hotel and travel earnings grew 11.81% to Rs 3.73 billion and the construction sector earnings fell 12.33% to Rs 3.28 billion.
The power and energy sector grew 91.3% to Rs 6.62 billion and plantation sector earnings fell 51.84% to Rs 2.09 billion.
The manufacturing sector saw earnings grow 2.14% to Rs 8.84 billion and healthcare grew 21.5% to Rs 2.14 billion.
The motors sector fell 30.33% to Rs 1.75 billion.
The IT sector reported a cumulative loss of Rs 666.6 million, down 1,611% from a Rs 44.11 million gain the previous year.
Some of the companies reported results for nine months up to end December 2013, and others for 12 months.
2013 was a tough year for the private sector, crowded-out by the government for bank loans.
New loans to the private sector amounted to Rs 155.3 billion in 2013, a four-year low. New loans generated by the domestic banking system to the government surged to Rs 435.1 billion in 2013, a four-year high.
Economists at the Economics Association of Sri Lanka and Verité Research have pointed out that since the end of the decades-long conflict in 2009, economic growth was fuelled by imports, construction and heavy government spending, and was therefore unsustainable. Exports and foreign direct investment were not performing satisfactorily enough to generate real economic growth, and steer the economy away from a debt trap.
The Central Bank said there was enough capacity for domestic banks to generate private sector credit this year contributing to the real economy without creating inflation.
So far this year, private sector credit growth has been sluggish as well, with banks opting to park excess liquidity in government securities.
Economists warn that the low policy rate regime could bring down market interest rates and fuel imports, and if the exchange rate was defended by selling down reserves, pressure could mount on the balance of payments as well.
www.ceylontoday.lk
Total earnings for 2013 were down to Rs 129.3 billion, from Rs 134.9 billion in the previous year, 2012.
High interest rates, inflation, rising energy, raw materials and wage costs weighed down earnings of the corporate sector.
Banking sector earnings fell 3.69% to Rs 48.54 billion, down from Rs 50.4 billion a year ago. Beverage sector earnings grew 5.05% to Rs 20.94 billion, up from Rs 19.93 billion a year ago.
Diversified sector earnings fell 26.08% to Rs 13.3 billion, down from Rs 17.99 billion a year ago and Telecommunication earnings grew 6.72% to Rs 10.62 billion, up from Rs 9.95 billion a year ago.
Hotel and travel earnings grew 11.81% to Rs 3.73 billion and the construction sector earnings fell 12.33% to Rs 3.28 billion.
The power and energy sector grew 91.3% to Rs 6.62 billion and plantation sector earnings fell 51.84% to Rs 2.09 billion.
The manufacturing sector saw earnings grow 2.14% to Rs 8.84 billion and healthcare grew 21.5% to Rs 2.14 billion.
The motors sector fell 30.33% to Rs 1.75 billion.
The IT sector reported a cumulative loss of Rs 666.6 million, down 1,611% from a Rs 44.11 million gain the previous year.
Some of the companies reported results for nine months up to end December 2013, and others for 12 months.
2013 was a tough year for the private sector, crowded-out by the government for bank loans.
New loans to the private sector amounted to Rs 155.3 billion in 2013, a four-year low. New loans generated by the domestic banking system to the government surged to Rs 435.1 billion in 2013, a four-year high.
Economists at the Economics Association of Sri Lanka and Verité Research have pointed out that since the end of the decades-long conflict in 2009, economic growth was fuelled by imports, construction and heavy government spending, and was therefore unsustainable. Exports and foreign direct investment were not performing satisfactorily enough to generate real economic growth, and steer the economy away from a debt trap.
The Central Bank said there was enough capacity for domestic banks to generate private sector credit this year contributing to the real economy without creating inflation.
So far this year, private sector credit growth has been sluggish as well, with banks opting to park excess liquidity in government securities.
Economists warn that the low policy rate regime could bring down market interest rates and fuel imports, and if the exchange rate was defended by selling down reserves, pressure could mount on the balance of payments as well.
www.ceylontoday.lk
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