Sri Lanka Hemas Sept quarter net down 14-pct

ECONOMYNEXT – Sri Lanka’s Hemas Holdings said group net profit in the September 2017 quarter fell 14% to Rs726 million from a year ago.

Sales rose 8.6% to Rs11.7 billion over the period, according to interim accounts filed with the stock exchange.

Diluted earnings per share were Rs1.26. EPS for the six months to September 2017 were Rs2.47 with profit down 8% to Rs1.4 billion although sales rose 11.6% to Rs23 billion.

"Despite consolidated revenue growing aided by higher turnover from the healthcare and mobility sectors, group earnings indicate a decline due to our Bangladesh personal care business, pharmaceutical distribution, leisure and travel all facing margin challenges," Chief Executive Steven Enderby.

"Further cost escalations were experienced as we invest in expanding our consumer portfolio and build new pharmaceutical and logistics facilities.

"Domestic consumer demand remains soft impacted by higher headline inflation, drought conditions persisting in parts of the country, and headwinds from currency fluctuations and VAT increase."

Sri Lanka Commercial Bank Sept net profit up 11-pct

ECONOMYNEXT – Sri Lanka’s Commercial Bank of Ceylon PLC said September 2017 quarter net profit grew 11.46% to Rs4.1 billion from a year ago.

Interest income rose 29% to almost Rs27 billion while interest expenses grew at 29.5% to Rs16.4 billion and net interest income grew 28.3% to Rs10.6 billion over the period, according to interim accounts filed with the stock exchange.

Net fee and commission income rose 24% to 2.2 billion. Trading losses grew sharply during the quarter, up 286% to Rs920 million, the accounts showed.

Impairment charges for loans and other losses grew 160% to Rs658 million mainly from a growth in individual impairment with collective impairment kept at the same levels.

Diluted earnings per share were Rs4.34. The stock last traded at Rs141.50. EPS for the nine months to September 2017 were Rs12.39 with net profit up 15.3% to Rs11.8 billion.

Interest expenses increased 40% to Rs47.4 billion mainly due to an increased demand for fixed deposits in the nine-month period, resulting in net interest income growing by 16.44% to Rs 28.242 billion, Commercial Bank said in a statement.

Chairman Dharma Dheerasinghe said the bank had restricted the growth of expenses to 6.88% or Rs949.1 million more than that of the corresponding period of last year.

“We continue to improve the quality of our loan book leading to further reductions in our NPL ratios and focussed on growing volumes in core business areas,” he said.

Commercial Bank Managing Director Jegan Durairatnam noted that the bank ended the nine months with capital ratios that were substantially higher than those required under Basel III which came in to effect in July this year.

He also said that the bank’s capital funds stood at over Rs90 billion and hence were well above the Rs20 billion specified under the minimum capital standards announced in a recent regulation for licensed banks in Sri Lanka.

Commercial Bank’s assets grew by Rs86.8 billion or 8.57% over the nine months to Rs1.099 trillion as at 30th September 2017.

The increase over the preceding 12 months was Rs145.7 billion at a monthly average of more than Rs12 billion, reflecting YoY growth of 15.28%.

Net loans and receivables from customers stood at Rs707.4 billion at the end of the review period, up Rs91.4 billion or 14.84% since end-December 2016, an average growth in excess of Rs10 billion per month.

“The loan book’s growth since September 2016 was Rs133 billion or 23.14%, at a monthly average of more than Rs11 billion over the preceding 12 months,” the bank said.

“The bank continued to make noteworthy progress in reducing impairment charges for loans and other losses during the nine months reviewed from Rs1.8 billion to Rs1.5 billion, an improvement of 17.14%.

“This was made possible by enhancements in the quality of its loan book, as evidenced by reduced NPL ratios,” the bank said.

The bank’s gross and net NPL ratios stood at 2.02% and 1% respectively at 30th September 2017, from 2.18% and 1.09% at end December 2016, and 2.49% and 1.26% a year ago.

Total deposits of the bank grew by Rs79 billion or 10.68% since end-December 2016 to Rs818.6 billion as at 30th September 2017, reflecting average monthly growth of Rs8.8 billion.

Growth of the deposit base over the preceding 12 months was Rs108.1 billion at an average of Rs9 billion per month, recording YoY growth of 15.22%.

“A drop in exchange profits as a result of a drop in swap premiums during the review period as against an increase in swap premiums last year, resulted in total operating income growing by 12.37% to Rs 35.962 billion,” the statement said.

Net operating income however increased by 14.14% to Rs34.467 billion through the improved impairment charges owing to lower NPL ratios, it said.

Shareholder funds crossed the Rs100 billion mark for the first time to Rs102.5 billion as at 30th September 2017, an increase of Rs 24 billion or 30.84%, consequent to the rights issue of shares, a reversal of mark to market losses on the bank’s Available for Sale (AFS) portfolio and the profits of the nine months.

The growth of shareholder funds over the preceding 12 months was Rs 26.756 billion or 35.31% YoY.

Sri Lankan stocks extend run of declines, hit near 6-week closing low

Reuters: Sri Lankan shares fell for a third straight session on Monday to their lowest close in near six weeks, weighed down by declines in telecom and banking stocks after the island nation targeted both cash-rich sectors in its 2018 budget to boost revenue.

The Colombo stock index ended 0.63 percent weaker at 6,511.55, its lowest close since Oct. 4. Last week it dropped 1 percent.

The market was dominated by foreign investors who accounted for 86 percent of the day’s buying.

The net bought shares worth 570.1 million rupees ($3.71 million), extending the net foreign inflow in equities to 18.7 billion rupees so far this year.

Finance Minister Mangala Samaraweera imposed new taxes on motor vehicles, telecoms, banks and liquor in a bid to boost revenues in its 2018 budget outlined on Thursday, as the budget deficit for the current year slipped to 5.2 percent of the gross domestic product.

Samaraweera imposed taxes on telecom towers and text messages, and introduced a debt repayment levy of 20 cents per 1,000 rupee bank transaction with effect from April 1 next year.

“Retail investors are not clear about the budget. That is the main reason for the fall. Retail investors were not active at all,” said Atchuthan Srirangan, senior research analyst, First Capital Holdings PLC.

“There are several taxes that are not decided if they should be borne by the customers or businesses. But eventually they will be passed to the customers, making cost of living higher.”

He also said the release of the government gazzate notification on new Inland Revenue Act will also weigh on the market in the next few days.”

Turnover was 1.29 billion rupees ($8.40 million) on Monday, more than this year’s average of around 956 million rupees.

The finance minister announced tax concessions worth a monthly 1.5 billion rupees ($9.8 million) on Wednesday to reduce the cost of living and boost consumption.

Top mobile services provider Dialog Axiata dropped 3 percent, while listed private lender Hatton National Bank fell 1.8 percent.

($1 = 153.6000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sherry Jacob-Phillips)

Expolanka announces Q2 financial performance amidst challenging external environment

Sri Lanka’s leading logistics provider Expolanka Holdings announced its second quarter performance for 2017/18, delivering year on year revenue and gross profit growth amidst a challenging climate for business globally.

Expolanka Holdings generated a revenue of Rs 21.7 billion (YOY growth of 34%), delivering a Gross Profit of Rs 3 billion (YOY growth of 9.8%) for the quarter. The company delivered these results while accounting for two key factors; a drop in GP Margin arising from an unanticipated industry-wide increase in airline rates coupled with space constraints challenging the company’s procurement process, and an increase in overheads due to identified initiatives that were undertaken over the period. Both these factors resulted in a net loss of Rs 89 million for the quarter.

In the Logistics sector, Expolanka continued to deliver strong top line performance by generating a revenue of Rs 35 billion (YOY Growth of 34%) during the first half of the year. Air Export volumes grew by 25%, and Ocean Export volumes grew by 19% on a Year to Date basis. The company is focusing on accelerating growth from high potential origins in East Asia (China, Philippines, Vietnam and Indonesia) whilst expanding the core South Asia operation. Expolanka continues to retain emphasis on growing the core trade lanes of USA and Europe.

In the Leisure sector, consolidation continued with promising growth in the corporate travel solution business which recorded a revenue of Rs 664 million for the first half of the year. With a key divestment, the company realigned its resources to growing the core travel solutions operation, leading to organic growth within the sector. The sector was able to deliver a Profit After Tax of 100 million (YOY Growth 6%) for the same period.

The Investment sector recorded a revenue of Rs 2 billion for the first half of 2017. The loss incurred in this sector is primarily attributed to the corporate center, which functions as a strategic and support service centre to the group.

With Asia reawakening to the key benefits associated with trade, Expolanka expects its Asia pivot to yield strong contributions to the overall business. Asia continues to be a key sourcing hub for Expolanka customers globally and the company’s continued growth in volumes and topline have been generated through these key markets, noted Executive Director and CEO Hanif Yusoof.

The challenge remains in addressing the externalities that impact gross margins and operational efficiency. “We are very confident that the corrective and precautionary measures we are taking in this regard will have a positive impact on our financial performance in the medium term,” said Yusoof. “This year has been a challenging one for us at Expolanka, as we attempt to grapple with an unforgiving external environment and the immediate overhead impact of some of our initiatives. We are taking immediate steps to mitigate external challenges, and are confident that our drive to expand and consolidate our business will yield very positive results in the medium term."

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