Nestlé Sri Lanka unit June net up 33-pct

ECONOMYNEXT – Nestlé Lanka, the Sri Lankan unit of the Swiss food multinational, said June 2015 quarter net profit rose 33 percent to 1.3 billion rupees from a year ago.

Sales of the firm rose 11.2 percent to nine billion rupees over the period, a stock exchange filing said.

Earnings per share rose to 24.18 rupees in the June 2015 quarter from 18.16 rupees the year before.

Other operating income fell sharply partly because of foreign exchange losses.

Food companies have seen profit margins expand on the back of the commodity price collapse.

Sri Lankan shares near 7-month closing high; stability hopes help

Reuters: Sri Lankan shares rose more than 1 percent on Tuesday to end near their highest level in nearly seven months as hopes of political stability and improved corporate earnings in the April-June quarter boosted sentiment, brokers said.

However, some foreign investors sold off the island nation's risky assets.

The main stock index ended 1.1 percent up at 7,458.92, its highest close since Jan. 16. The gain helped raise the market capitalisation by 34.4 billion rupees.

The bourse has gained 7.73 percent in a month through Tuesday.

"Market was very bullish. More institutional and high net worth buying lifted the turnover. It's a buyers market and investors were going up and buying," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

Conglomerate John Keells Holding Plc jumped 1.62 percent while Distillers Company of Sri Lanka Plc gained 3.47 percent.

Dialog Axiata Plc rose 1.75 percent and Nestle Lanka Plc rose 1.80 percent.

The index has been gaining since July 7 on expectations that strong corporate earnings and political stability after the elections on Aug. 17 would boost returns, analysts said.

Turnover stood at 2.61 billion rupees ($19.52 million) on Tuesday, more than double this year's daily average of 1.13 billion rupees.

Foreign investors, however, sold a net 295.5 million rupees worth equities while they have offloaded a net 490.7 million rupees worth of shares so far this year. 

($1 = 133.7400 Sri Lankan rupees) 

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

Sri Lanka Finlays plantations firms make losses in June quarter

ECONOMYNEXT – Two regional plantations companies owned by the Finlays group have both reported losses in the June 2015 quarter owing to the continuing slump in tea and rubber prices.

Hapugastenne Plantations made a loss of 46 million rupees in the June 2015 quarter compared with a profit of 81 million rupees a year ago, a stock exchange filing said.

Sales of the firm fell 12 percent to a billion rupees. The firm made a loss per share of one rupee in the June 2015 quarter compared with earnings of 1.76 rupees the year before

Udapussellawa Plantations made a loss of six million rupees in the June 2015 quarter compared with a profit of 71 million rupees the year before.

The firm’s sales rose 31 percent to 551 million rupees. The loss per share was 31 cents in the June 2015 quarter against earnings of 3.67 rupees the previous year.

James Finlay Plantation Holdings has majority stakes in both plantations companies.

Hapugastenne Plantations chairman Naresh Ratwatte said the firm’s results during the period from January to June is “an accumulation of the difficult trading environment in both tea and rubber as a result of the political and economic instability and the sanctions imposed on our main markets.”

In addition, he said, the “erratic weather conditions continue to hamper the much wanted leaf intakes.”

Ratwatte said Colombo auction prices for both tea and rubber continued to plummet during the period under review.

“Although the industry was optimistic and did have expectations of some relief in tea prices since the agreement between US and Iran was confirmed, this was not to be as the prices continue to drop week on week into July and we expect the balance half of the year too to be a buyers’ market and not the growers,” said Ratwatte.

Udapussellawa Plantations had reclaimed four estates in Ragala Group in August 2014 whose losses contributed to the company’s overall loss, Ratwatte said.

“These four estates are responding well to the change of management and we see encouraging improvements in efficiencies,” he said.

“We are confident that we will see improved results and turn around to profitability when the tea prices re-stabilize.”

Sri Lanka Access Engineering June net up 10-pct

ECONOMYNEXT – Sri Lanka’s Access Engineering said June 2015 quarter net profit rose 10 percent to 600 million rupees from a year ago, driven large by earnings from its motor vehicle sales unit.

Sales of the construction group rose 25 percent to 4.2 billion rupees in the June quarter from a year ago with a sharp rise seen in other income, a stock exchange filing said.

Earnings per share rose to 60 cents in the June 2015 quarter from 54 cents the previous year.

Profits from construction actually fell during the quarter. Earlier this year the government cancelled an airport runway repair contract given to the firm.

But profit from its Sathosa Motors subsidiary, which holds the franchise in Sri Lanka for Isuzu Motor vehicles, doubled to 86 million rupees from the year before.

Balangoda Plantations makes loss

Balangoda Plantations reported a loss in the June 2015 quarter as the firm which grows tea and rubber was affected by the continuing slump in global commodity prices.

The firm made a loss of 76 million rupees in the June 2015 quarter compared with a net profit of 57 million rupees a year ago, a stock exchange filing said.

Sales of the firm, controlled by Harry Jayawardena's Melstacorp Limited, fell 23 per cent to 732 million rupees from the year before.

Balangoda Plantations reported a loss per share of 3.20 rupees in the June 2015 quarter compared with earnings of 2.42 rupees the previous year.

Revenue from both tea and rubber fell during the June 2015 quarter, the accounts showed.

In the tea business, a gross profit of 103 million rupees in the June 2014 quarter turned to a loss of 149 million rupees in June 2015 while losses in the rubber segment remained around 333 million rupees.

Sri Lanka Foreign Debt falls to record Rs 43 b

Government revenue in the first six months of the year has gone up by 18 percent to Rs 703 billion when compared with the corresponding period in 2014. The revenue reported in the first six months of 2014 was Rs 596 billion.

The increase in the government revenue and the curtailing of extravagance expenditures of the previous government with efficient financial management by the new government led to managing the public debt efficiently since January

Sri Lanka’s foreign debt under the new government has decreased while maintaining the foreign reserve at US $ 7.5 billion,the Finance Ministry said yesterday.

Sri Lanka has borrowed only Rs 43 billion in the first half of this year as external debt. The Finance Minister attributed this lower amount recorded to the efficient manner in which the reforms introduced by the new government to the public administration and the financial management.

As envisaged in the budget -2015 the approved amount of commercial loans to be taken in this year is Rs 195 billion of which the government has so far obtained 43 billion rupees which is only a 22 percent. But, according to the General Treasury, the total outstanding government debt increased by 8.8 percent to Rs. 7,390 billion by end of 2014 from Rs. 6,793 billion in 2013.

However, the outstanding total debt reached an all time high of Rs 3272 billion in June 2014 under the previous government and the lowest recorded was Rs 70 billion in 1986 under the then government of President J.R. Jayewardene. According to statistics available at the General Treasury the annual debt servicing during the 2015 is estimated to be Rs 1,265 billion.

Finance Minister Ravi Karunanayake said that most of the foreign debt obtained by the previous government was at commercial interest rate up to 8 percent.

The Minister said that the new government has retired some of these debts which were obtained at higher interest rate and obtained new debt under the lower rate of interest.

As a result the government’s debt servicing interest rate to GDP ratio has come down to 3.5 percent from the earlier rate of 5 percent.
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Asian Alliance Insurance posts 31% growth in 1H

Asian Alliance Insurance has posted an impressive 31% growth in top line Life GWP reinforcing its position as the fastest growing insurer in the top league of the industry.

Gross Written Premiums for the first half of 2015 were Rs 1.8 billion and combined with General Insurance premiums of Rs 879 million, the Insurance Group posted a consolidated top line of Rs 2.7 billion.

"With continuous investment in staff, as well as introduction of cutting-edge solutions such as self-service insurance and a number of industry first moves, Asian Alliance Insurance has laid a solid foundation not only for the short term, but more importantly for long-term growth," Asian Alliance Insurance Managing Director, Iftikar Ahamed said. "We are confident that this will increasingly reflect in our future financial performance." Asian Alliance Insurance is held by Softlogic Capital and is part of the Softlogic Group.
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Capital Alliance maintains growth momentum with Rs. 531 million net profit

Capital Alliance Limited (CALT), has recorded an impressive profit after tax (PAT) of Rs. 531 million for the financial year ending March 31, 2015.

A continued focus on developing strong partnerships and an effective research unit, combined with a renewed effort to drive synergies throughout the group, have helped CALT to maintain a well-balanced momentum of growth despite rapidly changing market conditions. The company recorded an increase in profits of 60% over the previous financial year.

CALT's net interest income was recorded at Rs. 150.4 million and capital gains doubled over the previous year to Rs. 591 million.

CALT Chief Executive Officer Gihan Hemachandra said the CALT team has managed to maintain well-balanced growth over the course of this financial year. There was also a significant growth in other income channels, which contributed Rs.30.2 million to overall income from operating activities. The company's superior Return on Assets of 8% and a Return on Equity of 43% showcases the success of the management's dual focus on expanding the company's fee based business and market making activities. CALT also continued to dominate the listed debenture space by obtaining over 50% market share in secondary market trading.

This is due to a concerted effort to make a market in several blue chip debt securities.

As at 31 March 2015, the company's total assets were valued at Rs. 6.64 billion.
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Access Engineering plans on building land bank

Access Engineering is planning on building a land bank, to exploring opportunities in the property development market of Sri Lanka.

Access Engineering Chairman Sumal Perera said in the company’s annual report for 2014/2015 that the construction industry’s contribution to GDP growth stood at 10% for the year in review.

For most of the year, Government support for infrastructure development remained steady.

Looking ahead, Access Engineering will continue to consolidate its core business via our value engineering approach. We will continue our exploration of opportunities overseas. Exploring business opportunities beyond Sri Lanka’s borders remains within company’s immediate focus. The company commenced a project in Papua New Guinea which was completed in the current period of review, with a positive contribution to the bottom line. We opened a branch office in the Republic of Djibouti to aid our push further afield in February 2015.

Our focus on planned forward integration saw the Company acquiring Access Projects (Private) Limited, a leader in leisure, related building construction and a provider of total interior solutions with manufacturing capabilities in aluminium work and metal ceilings.
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Spence 1Q hit by energy sector loss, Maldives’ dip

Diversified blue chip conglomerate Aitken Spence PLC’s financial results released to the Colombo Stock Exchange reported a pre-tax profit of Rs. 732 m for the first quarter, while Group’s profit attributable to shareholders of the parent was Rs. 420 m. Reported revenue for the first quarter was Rs. 5.9 b, whilst earnings per share for the quarter stood at Rs. 1.04.

The 100 MW Ace Power Embilipitiya ceased operations in April 2015 subsequent to the conclusion of the 10-year power purchase agreement with the Ceylon Electricity Board. 

The corresponding results for the previous year included the profits from the full operation of the Embilipitiya power plant and insurance proceeds received for the damaged water villas at one of its resorts in the Maldives.

“Although we were keen to contribute to the stability and capacity of the National Grid, in line with the growing energy requirement in the country, the authorities did not use the opportunity to secure guaranteed power at a reasonable cost by failing to negotiate a mutually-favourable agreement to generate power from our plant in Embilipitiya,” said J.M.S. Brito, Deputy Chairman and Managing Director of Aitken Spence PLC.

“Aitken Spence has several large resort construction projects taking place in Negombo, Kalutara and Ahungalla that are expected to add around 750 rooms to Sri Lanka’s tourism sector. The construction of the Heritance Negombo and the expansion of The Sands in Kalutara are expected to be completed within the financial year, despite delays. The construction of the RIU Hotel in Ahungalla is expected to be completed in the winter of 2016. Turyaa Chennai, the 143-room city property is awaiting a few regulatory licenses to commence commercial operations,” he added.

The Tourism sector reported Rs. 435 m as pre-tax profits for the quarter. The sector revenue for the quarter was Rs. 3.55 b.

The hotel industry in the Maldives felt the negative effects of key source markets with arrivals from Russia falling by 40% and the Korean market showing a significant drop, during the first financial quarter. Aitken Spence, which has several resorts in the islands, has been adjusting to changing market conditions in the Maldives with several key source markets to Maldives facing downturns.

Maritime and Logistics sector performed well, reporting Rs. 214 m with pre-tax profits, while revenue was Rs. 1.85 b.

Revenue from the Strategic Investments sector without accounting for the contribution from the Embilipitiya power plant was Rs. 1.29 b while profits before tax was Rs. 86 m. Reported figures showed revenue at Rs. 1.47 b and profits before tax at Rs. 23 m.

Services sector of Aitken Spence performed commendably with a profit-before-tax of Rs. 60 m and revenue at Rs. 277 m.
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Hayleys ups Q1 profits

Hayleys PLC recorded a 9 percent increase in its Profits Before Tax (PBT) for the first quarter ending June 2015.

PBT for the quarter was recorded at Rs. 1.2billion, up from Rs. 1.1 billion during the same quarter in the previous year.

The Transportation and Logistics Sector sustained its strong growth momentum during the quarter with continued improvements to its benchmark on service delivery and new business innovations. Sector PBT rose 98 percent to Rs. 372 million in the quarter under review.

The Purification Sector performed commendably despite a downturn in key markets and the weakening of the Euro, PBT recording a healthy growth to Rs.222 million. The Hand Protection Sector contributed Rs. 196 million in profits to Group PBT, a reduction for the same period in the previous year.

This was mainly on account of pressure on margins due to strong competition from the manufacturers in the region.

The Agriculture sector was boosted by strong performance due to the Agri Inputs and Exports sector compared to the previous year. The Sector PBT increased to Rs. 187 million.

Revenue from the Construction Material sector increased to Rs. 793 million in the first quarter, reflecting continued growth in the construction industry. However, increased competition in the local market eroded profit margins, resulting a dip in PBT.

The Textiles sector continued its upward momentum recording a PBT of Rs 43 million for the quarter consolidating its turnaround.

Revenue from the Plantations sector was affected by continued difficulties in key global markets for tea in the Middle East and Eastern Europe.

In this context, the prospect of another wage increase threatens to further increase production costs in the industry. The situation is compounded by a continued global downturn in latex prices, adversely affecting the rubber sector.

Hayleys Chairman and Chief Executive Mohan Pandithage, stated,” I am pleased to note that all sectors continue to make a positive contribution to the Group bottom line. However, the Plantation sector is facing a challenging situation. The tea and rubber industry in Sri Lanka and globally, is in the midst of one of the most prolonged depressions and strategies are being evaluated to overcome these challenges.”
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