Sri Lankan shares snap 3 sessions of falls; flood woes weigh on mkt

Reuters: Sri Lankan shares rose on Wednesday, recovering from a more than three-week closing low hit in the previous session and snapping three straight sessions of falls, though floods and landslides that killed over 200 people weighed on sentiment.

The extent of the damage is yet to be assessed, with the country's main agricultural exports - tea and rubber - hit by the worst torrential rains in 14 years.

Analysts said it is too early to evaluate the real impact of the floods and landslides, though short-term disruptions in rubber tapping and plucking of tea leaves and buds could lead to a decline in output.

Inflation could rise in the short term, especially due to crop damages and distribution difficulties with regard to fresh food produce and staple food items, they said.

"Market is up mainly on local buying. Investors are still looking for bargains. They are waiting to see weather prices would come down further," said Dimantha Mathew, head of research, First Capital Holdings PLC.

The Colombo stock index ended 0.29 percent stronger at 6,674.32, posting a monthly gain of about 1 percent. It posted its lowest close since May 5 on Tuesday.

Turnover was 597.8 million rupees ($3.91 million) on Wednesday, less than this year's daily average of 901.2 million rupees.

Foreign investors, who have been net buyers of 19.42 billion rupees worth of equities so far this year, sold shares worth 43.1 million rupees on a net basis.

Dialog Axiata Plc jumped 3.42 percent, while conglomerate John Keells Holdings Plc rose 0.60 percent. 

($1 = 152.7500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Lanka Ashok Leyland records Rs. 11.4 bn revenue

Lanka Ashok Leyland ended another successful year with improved results touching total revenue of Rs. 11.4 billion owing to an excellent fourth quarter where revenue reached Rs 3.8 billion.

Lanka Ashok Leyland’s foray into export markets made significant gains this year which contributed in expanding the gross profit margin to 9% against 8.4% a year earlier.

Non-recurring expenses relating to tax charges and an impairment provision amounting to approximately Rs 120 mn drove up operating expenses by 44% to Rs 502.7mn from Rs 348.7mn in 2015.

Higher interest rates during the year drove up net finance expense by 64% to Rs 91.1mn against Rs 55.7mn in 2015 while interest bearing liabilities fell almost 9% to Rs 1.8bn from Rs 2 bn a year ago. Inventory levels rose 3% to Rs 3.9 bn for the same period. Profit before tax grew 12% to Rs 351.6mn compared to Rs 314.0mn posted for 2015.

Taking into consideration the non-recurring expenses and the improved performance, the board of directors has declared Rs 30 per share as a dividend representing a 20% increase over last year.

Commenting on the results, Umesh Gautam, CEO of Lanka Ashok Leyland said, “despite of frequent changes in the import duties, restricted leasing facilities and adverse market conditions, this year’s performance has been a reflection of the prudent financial management, collective effort by management and all our employees.

The bottom line remains healthy, notwithstanding the extraordinary line items on the firms’ operating expenses.

For another year, the key macro variables trended against us as average weighted lending rates rose approximately 200 basis points impacting demand while the Lankan Rupee lost around 4.5% against the US Dollar driving import prices up and negatively impacting our margins.

However the depreciation was not as severe as 2015, where the LKR fell over 9%, and we were able to navigate the risks better.

In focusing on the variables within our control, Gautam said “I am proud of the marketing team’s innovation, industry, and effort throughout the year to increase our market share and sales in the midst of a challenging environment.

Overall unit sales increased 10% year on year despite rising costs, partly driven by the construction sector which continues to be a driving contributor for national output”

We remain well capitalised as interest bearing liabilities fell almost 9% while inventories rose 3%. During the year, we were granted better terms of import through our principal Ashok Leyland, greatly helping our working capital positions.

Looking ahead, we continue to see strong demand emanating from key economic sectors such as the construction industry going into next year despite a challenging external environment for the rest. Interest rates may start to fall in the latter part of the year, however it depends on other economic factors and the success of government reform to tackle its foreign debt position. Addressing our over-reliance on domestic vehicle sales as a disproportionate portion of revenue, our export push has grown over 700% in the last year and we hope to make further gains.”
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Ceylinco Life’s 1Q net profit up 58% to Rs 673 mn

Ceylinco Life has accelerated into FY 2017 posting robust income growth and exceptional profit growth for the three months ending March 31, 2017.

Sri Lanka’s life insurance leader reports that profit before tax improved by a noteworthy 51 per cent over 1Q, 2016 to Rs 822.73 million. Profit after tax for the three months, at Rs 673.34 million, reflected even higher growth of 57.8 per cent despite a 26 per cent increase in income tax for the period.

Gross written premium income was up 7.26 per cent to Rs 3.56 billion, the company said, while investment and other income grew by a remarkable 21.39 per cent to Rs 2.31 billion.

Ceylinco Life’s investment portfolio reached Rs 85.98 billion as at March 31, 2017, representing an increase of Rs 5.23 billion or 6.48 per cent since December 31,2016 and Rs 12.58 billion or 17.14% per cent over the preceding 12 months.

The company’s Life Fund stood at Rs 79.89 billion at the end of the quarter reviewed, a growth of Rs 1.97 billion or 2.53 per cent over three months.

“The figures for the first quarter are impressive, especially in the context of the prevailing volatility and uncertainty in the market,” Ceylinco Life Managing Director/CEO R. Renganathan said.

“We believe that our unrelenting focus on business fundamentals and astute investment strategies can be credited for this stellar performance.”

Ceylinco Life paid Rs 1.6 billion in net benefits and claims in the three months reviewed, a decrease of 7.81 per cent over the corresponding period of last year.

Total assets of the company grew by 5.4 per cent over the three months to Rs 101.738 billion.

At the end of the quarter under review, Ceylinco Life’s investment portfolio comprised of Government Securities (48 per cent); Fixed Deposits (13 per cent); Real Estate (9 per cent); Corporate Debt (29 per cent) and Others (1 per cent). All investments are made in conformity with the investment guidelines stipulated under the Regulation of the Insurance Industry Act No 43 of 2000 and are subject to regular monitoring by the Insurance Board of Sri Lanka (IBSL).

Ceylinco Life ended 2016 with Rs 23.43 billion in total income, with gross premium income of Rs 15 billion and investment income of Rs 8.78 billion.

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Sri Lanka LPG firm Rs747mn in the red in March

ECONOMYNEXT - Profits at Sri Lanka's Laugfs Gas Plc which has interests in cooking gas, leisure and logistics lost 747 million rupees in the March 2017 quarter, with retail liquefied gas under price control, interim accounts show.

The firm reported a loss of 1.93 rupees per share for the quarter. In the year to March it reported a loss of 627 million rupees with leisure sector also in the red.

Gross revenues rose 30 percent to 5.0 billion rupees in the March 2017 quarter from a year earlier, but cost of sales rose at a faster 48 percent to 4.3 billion rupees, shrinking gross profits 27 percent to 683 million rupees.

International price of propane and butane, which is used to make LPG, rose dramatically from the last quarter of 2016, but has plunged from April.

The Saudi Aramco benchmark price for Butane rose to 600 US dollar a tonne in February 2017 from 315 dollar a year earlier. Price fell sharply to 390 dollar a tonne in May.

Propane which rose to 510 dollar a tonne in February has fallen to 385 dollar a tonne in May.

Distributors that do not hedge imports will benefit.

Sri Lanka’s Expolanka March net profit up 70-pct

ECONOMYNEXT - Sri Lanka’s Expolanka Holdings said March 2017 quarter net profit rose 70% to Rs255 million from a year ago.

Quarterly earnings per share of the firm, now controlled by Japan’s SG Holdings, rose to 13 cents from 08 cents over the period,

Group March quarter sales were up 8% to Rs15.2 billion with other income up sharply as were finance costs, according to interim accounts filed with the stock exchange.

Annual EPS was 49 cents with net profit down 14% to Rs955 million although sales went up 13% to Rs63.5 billion.

The accounts showed the group’s main logistics business profit went up only 4% to Rs1.7 billion during the year despite 15% sales growth.

But the group’s leisure business profit shot up 184% to Rs203 million on 12% sales growth.