Sri Lanka Watawala Plantation profits drop; palm oil supports bottomline

(LBO) – Sri Lanka’s Watawala Plantations said it made a profit of 131 million rupees in the June 2015 quarter, down 43 percent, compared with 231 million rupees in the same quarter last year, battered by declines in the tea sector.

The firm reported earnings of 55 cents per share for the quarter, in interim accounts filed with the Colombo Stock Exchange.

In the three months to June revenues declined from 1,880 million rupees to 1,685 million rupees while cost of sales also dropped marginal 3 percent to 1,483 million rupees. Gross profits eased to 202 million rupees from 354 million rupees.

Palm Oil segment registered a revenue growth of 24 percent year on year to reach 469 million rupees in 1QFY16.

The growth in revenue in the palm oil segment is primarily due to a sharp increase in Crude Palm Oil production, while net sale average marginally contracted compared to the corresponding period last year, consequent to a drop in global palm oil prices.

“The segment made a significant contribution to company’s profitability, having made a net profit of 227 million for 1QFY16,” Vish Govindasamy, managing director of Watawala Plantation, told shareholders.

Tea segment reported a revenue of 1.1 billion rupees June quarter compared to 1.3 billion rupees last quarter. Net loss for the quarter was 137 million rupees compared to net profit of 32 million reported in the comparative quarter last year.

“The decline in the tea sector performance is attributed to a drop in NSA consequent to sharp decrease in the Colombo tea auction prices, and increase in cost of production due to decrease in production,” Govindasamy said.

“Company continues to enhance the quality of its teas in order to gain a price advantage, while continuing to increase the palm oil yield,”

“Biennial wage negotiations are currently underway as the collective agreement between the Plantation Companies and Trade Unions lapsed on 31 March 2015. The new wage agreement, when agreed between the parties, will be effective retrospectively from 1 April 2015.”

The rubber segment which only accounted for 0.8 percent of the total revenue in 1QFY16 report at a net loss of 17 million rupees compared to 24 million rupees recorded in the same quarter last year. Losses were curtailed by the reduction of the rubber extent by design, Govindasamy told shareholders.

Sri Lanka Dipped Products June quarter profit down 43-pct

ECONOMYNEXT - Sri Lankan rubber gloves maker Dipped Products’ June 2015 quarter net profit fell 43 percent to 132 million rupees from a year ago as competition squeezed margins and low commodity prices caused losses in plantations.

Earnings per share fell to 2.20 rupees from 3.85 rupees over the period while sales fell 35 percent to 5.7 billion rupees, the Hayleys group subsidiary said in a stock exchange filing.

Tax costs fell 77 percent to 32 million rupees. A sharp downturn in plantations reduced profits, according to the firm, a big manufacturer of non-medical rubber gloves which claims a five percent share of the global market.

The Hand Protection Sector contributed 196 million rupees in profits to the group’s profit before tax, a 38 percent dip from the same period in the last financial year.

“This was mainly on account of pressure on margins due to strong competition from the manufacturers in the region,” a statement said.

“The plantation sector is impacted by the downturn in global tea demand and resulted in a 20 million rupee loss during the quarter versus a profit of 126 million rupees in the previous financial year.”

Managing Director Mahesha Ranasoma said the group is continuously focusing on cost reduction in operations to defray pressure on margins.

“Our newly commissioned capacity for household gloves is now into commercial production and we are looking forward to enter into the industrial supported glove market in Q2 as we are now ready to commission our new industrial glove manufacturing factory, namely D P L Universal Gloves Limited at Biyagama, Export Processing Zone.”

Sri Lanka’s Dialog Axiata June net up 15-pct to Rs1.9bn

ECONOMYNEXT – Sri Lankan mobile phone operator Dialog Axiata said the group’s June 2015 quarter net profit rose 15 percent to 1.9 billion rupees from a year ago and maintained its market leadership with subscribers crossing 10 million.

Sales of the group rose 6.6 percent to 17.7 billion rupees during the period with earnings per share at 23 cents compared with 20 cents the year before, a stock exchange filing said.

Group sales in the first half of 2015 rose six percent to 35.1 billion rupees from a year ago, a company statement said.

It said the group’s mobile business was impacted by the industry-wide introduction of a 25 percent bonus on Mobile Prepaid Domestic Calls since April 07, 2015.

“Robust revenue growth combined with operational efficiencies derived through cost management initiatives resulted in group EBITDA (earnings before interest, taxes, depreciation, and amortization) for 1H 2015 growing by 20 percent to reach 11.9 billion rupees.”

Group EBITDA margin for 1H 2015 was 33.9 percent.

On a Quarter-on-Quarter basis however, Group EBITDA declined by one percent to 5.9 billion rupees.

The Dialog Group paid 12 billion rupees to the government of Sri Lanka during 1H 2015, including direct taxes and levies as well as consumption taxes collected on behalf of the government.

Dialog Television (DTV), the digital pay television business of the group, saw revenue growing 25 percent in the first half of 2015 to reach 2.8 billion rupees.

“Notwithstanding robust revenue growth, EBITDA (of 516 million rupees) was constrained in growth to two percent,” Dialog Axiata said.

This was due to direct cost expansion because of product enhancements featuring the expansion of channel types.

DTV net profit fell 49 percent to 114 million rupees in the first half of 2015.

DTV’s Pay TV subscriber base grew by 37 percent to 534,000 as at the end of June 2015.

Royal Ceramics Lanka June quarter net profit up over 200-pct

ECONOMYNEXT – Royal Ceramics Lanka’s June 2015 quarter net profit shot up over 200 percent from a year ago as sales of locally made tiles which are protected against imports grew strongly and associate company profits almost doubled.

The company, which now controls local ceramic tile manufacture having bought over rivals, said in a stock exchange filing that sales rose 15 percent to 5.6 billion rupees in the June 2015 quarter from the year before.

Net profit shot up 249 percent to 562 million rupees in the June 2015 quarter with earnings per share at 5.08 rupees against 1.45 rupees a year ago, Royal Ceramics Lanka (RCL) said.

Finance expenses fell 28 percent to 209 million rupees while share of associate company profits almost doubled to 316 million rupees, the accounts showed.

Profit from RCL’s tiles business shot up to 434 million rupees from 90 million rupees the year before.

Profit from RCL’s sanitaryware business fell to 53 million rupees in the June 2015 quarter from 56 million rupees the previous year.

Losses narrowed in the paints business to 13 million rupees from 21 million rupees while aluminium business profit was stagnant at around 16 million rupees in the June 2015 quarter.

RCL reported losses from its plantations of 52 million rupees compared with a profit of 19 million rupees the year before while profit from finance rose to 202 million rupees from 117 million rupees.

Royal Ceramics Lanka group now consists of Lanka Ceramics and its subsidiaries, Lanka Tiles and Lanka Walltiles along with Royal Porcelain (Pvt) Ltd., Rocell Bathware Ltd., Royal Ceramics Distributors (Pvt) Ltd., Ever Paint and Chemical Industries (Pvt) Ltd., Rocell Ceramics Limited and Rocell Pty Ltd – Australia. (Colombo/August 7 2015)

Sri Lanka's Textured Jersey profits up 26-pct

ECONOMYNEXT - Textured Jersey Lanka Plc, a Sri Lanka based fabric maker, said profits rose 26 percent to 206 million rupees in the June 2015 quarter from a year earlier amid improving margins and volumes.

The firm reported earnings of 31 cents per share.

Group revenues rose 3 percent to 2.76 billion rupees, costs fell 1 percent to 2.43 billion rupees and gross profits rose 48 percent to 323 million rupees.

TJL has bought two related firms, Ocean India (Pvt) Ltd and Quenby Lanka Prints (Pvt) Ltd. Results of Quenby has been consolidated in the accounts from June. TJL's stand alone profit for the June quarter was 188 million rupees up 15 percent from a year earlier.

TJLs gross profit margin had expanded to 11 percent in the June quarter from 8 percent a year earlier.

"This reflects the impact of the previously expanded manufacturing capacity now translating to bottom line margins," Chairman Bill Lam told shareholders.

Sri Lanka's TATA, Benz agency net up 600-pct amid credit fired consumption

ECONOMYNEXT - Profits at Sri Lanka's Diesel and Motor Engineering Plc (DIMO) grew 655 percent to 228 million rupees in the March 2015 quarter from a year earlier, interim accounts showed as car sales picked up in a credit fired consumption boom.

Dimo which holds agencies for India's TATA and Germany's Benz reported earnings of 25.73 rupees per share, for the quarter. The stock traded at 750 rupees, up 40 rupees.

Dimo said group revenues grew 43 percent to 8.2 billion rupees, cost of sales rose 47 percent to 6.8 billion rupees and gross profits rose 28 percent to 1.38 billion rupees.

Finance costs fell 14 percent to 102 million rupees.

Sri Lanka's car sales have boomed amid historically low interest rates, while budget deficits expanded amid salary hikes to state workers and domestic borrowings also rose.

Sri Lanka's vehicle registry data analysed by JB Securities, a Colombo-based equity research house showed that registration of TATA Ace, Sri Lanka's best-selling mini truck rose to 952 units in March from 527 units a year earlier. Around 94 percent of all trucks are sold on credit.

Latest data showed rising levels of debt monetization or money printing, which keeps interest rates down against market fundamentals and generate bubbles and balance of payments pressure.

Sri Lanka's Vidullanka Plc, inks PPA with Uganda power grid

ECONOMYNET - Sri Lanka based Vidullank Plc, a mini hydro power company, said it had struck a Power Purchase Agreement (PPA) with Uganda's electricity grid to supply power from a 6.5 Mega Watt plant.

The PPA was signed on July 28, 2015 between Vidullanka subsidiary Muvumbe Hydro (U) Limited and Uganda Electricity Transmission Company Ltd.

The firm said it also had to sign an implementation agreement with Uganda's Ministry of Energy and Mineral Development.

Expolanka June quarter net up 28-pct

ECONOMYNEXT – Expolanka Holdings said June 2015 net profit rose 28 percent to 222 million rupees from a year ago helped by the benefits of its restructuring and strong growth in its core freight and logistics business.

Group sales rose 12 percent to 13.9 billion rupees from the year before with earnings per share rising to 11 cents in the quarter from 09 cents.

Profit from the group’s freight and logistics business rose 84 percent to 317 million rupees, while that from its travel and leisure sector went up three percent to 51 million rupees, interim results filed with the stock exchange showed.

“In the current business year, we will concentrate on achieving higher profitability and continued growth in all business units,” group chief executive Hanif Yusoof said in a statement.

“We are optimistic about our growth opportunities within this financial year.”

Yusoof said the group has only just started to reap the benefits of its strategic restructuring efforts.

“We have achieved a steady growth in this quarter, indicating potential for further progress in the near future.”

Revenues from the freight and logistics sector for the June quarter rose 36 percent to 11.7 billion rupees from the previous year.

“The group’s core markets in India, Bangladesh and Sri Lanka performed well fueled by the healthy growth in US trade lanes,” the statement said.

“Bangladesh in particular showed positive results and a healthy margin growth in comparison to the disappointing performance during the last two quarters.

“Far East businesses such as Indonesia and Vietnam continued to maintain the momentum from last two quarters and generate healthy revenue. Cost rationalization conducted during last year in USA, Dubai and Bangladesh has begun to indicate positive results.”

Sri Lanka Treasuries yields up despite debt monetization

ECONOMYNEXT - Sri Lanka's Treasury 6 and 12-month Treasury bill yields rose at Wednesday's auction data from the State debt office showed, with bids for 3-month bills being rejected.

The 6-month yield rose 07 basis points from a week earlier to 6.50 percent and the 12-month yield rose 06 basis points to 6.54 percent.

The rise was despite over 24 billion rupees of debt being monetized over the week.

On August 03, the Central Bank's Treasury Bill stock rose from 66 to 90 billion rupees and liquidity also rose in money markets with data also showing some conversions of dollar debt.

Sri Lanka's credit system is being pressured rising State domestic borrowing and sell-offs of rupee debt by foreign investors, after policy rates were brought to record lows.