Chevron Lubricants Lanka (LLUB) in Decline as CEO Kishu Gomes Exits

LBO – On May 22, 2018 Kishu Gomes resigned as Managing Director/CEO and as a Director of Chevron Lubricants Lanka with ‘immediate effect’ as per stock exchange disclosure. He was immediately replaced by the company’s Chairman Rochna Kaul, who has served as General Manager Chevron Lubricants in Pakistan.

The abrupt resignation came after a 22 year career at the multinational firm. After the resignation Gomes was quoted in several newspapers stating that the resignation was in order to take a break from corporate life, and that he hopes to play a future role nurturing young talent in the country.

In the months prior to the surprise resignation, Chevron Lubricants has been on the decline with a 27% decline in profits and a 9% decline in revenue for the year ended December 2017.

The decline has continued in the March 2018 quarter with revenue down 4% and profits down 15% year over year. The struggling multinational which once had a market capitalisation over Rs50bn has now seen its market cap decrease to below Rs19bn.

The Colombo Stock Exchange listed company (LLUB) has historically been a favourite of foreign institutional investors. However, with its market capitalisation dipping close to US$100mn, the market cap of the company may be approaching levels where foreign funds will find the stock unattractive from a liquidity perspective.

Chemanex posts Rs. 230 mn profit

Leading importer and distributor of industrial chemicals and intermediaries Chemanex PLC recorded a Rs. 724 million group turnover during 2017/2018 financial year, reporting a Rs. 230 million profit for the same period.

Considering the challenges, Rs. 2.03 billion worth Company faced, in the recent past a decision was made in 2017/2018 to carry out a strategic restructuring with a far-sighted vision.

Chemanex took a number of salient measures including the discontinuation of non-competitive operations, placing strong emphasis on core competencies and inducinggrowth in the relevant areas.

The Company also carried out a voluntary retirement scheme reducing the number of employees significantly and will obtain support services from within the CIC Group.

Chemanex also took steps for the disposal of unutilised assets during the same year, garnering a significant amount of cash and short term investment for the Company. Careful analysis of variousoptions available is being carried out in order to utilize the funds effectively.

“The steps required for restructuring the organization were carried out during the Financial Year, and the Company will now focus on its core business of distributing chemicals to selected industries.

It will exploit synergies with the chemical business of CIC Holdings and obtain support services within CIC Group.

The Board is confident that these steps will result in the Company making a profit on operations in the near future,” Chairman, Chemanex PLC, P. R. Saldin said.

Chemanexa subsidiary of CIC Holding PLChas maintained a strong position as the industry leader in the sphere of trading chemicals and industrial intermediates backed by four decades of expertise.
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Sri Lanka's Tess Agro struggles despite EU GSP+

ECONOMYNEXT - Sri Lanka's Tess Agro which exports fish to Europe is struggling to make use of the reinstatement of GSP Plus trading concessions with losses expanding 10.4 percent from a year earlier to 13.2 million rupees in the March 2018 quarter, interim accounts showed.

The company reported a 4 cents loss per share in the quarter. The share last traded at 70 cents on the Colombo Stock Exchange.

The loss per share was 10 cents for the year to end March 2018 with revenue declining 33 percent from a year earlier to 310.6 million rupees, interim accounts filed with stock exchange showed.

The company which exports fish to Europe has been making losses over the previous three years after the EU slapped a ban on fish exports from Sri Lanka for failing to prevent poaching.

Despite EU reinstating GSP Plus trade concessions in June 2017, pick up in export volumes was slow due to challenges in sourcing fish.

"As a result of the ban many fishermen had abandoned their livelihood," the company's chairman Faika Fernando told shareholders in the 2016/17 annual report.

Gross profit in the March quarter grew 7 percent from a year earlier to 6 million rupees with revenue declining 33 percent to 47 million rupees and cost of sales falling at a faster 37 percent to 41 million rupees.

Administrative expenses declined 5 percent to 9.3 million rupees, selling and distribution costs rose 140 percent 6.7 million rupees.

Net finance cost increased 20 percent to 3.1 million rupees.

Less than 1 percent of its revenue is made selling fish to the Sri Lankan market for which it operates a cannery.

Sri Lanka Treasuries yields flat; 3-month below overnight rate

ECONOMYNEXT - Sri Lanka's Treasuries yields were flat at Wednesday's auction with the 12-month yield falling 04 basis points to 9.44 percent, data from the state debt office said.

The 6-month yield was flat at 8.87 percent and the 3-month yield was flat at 8.34 percent.

The debt office offered 2.0 billion rupees of 3-month bills and accepted only 246 million rupees, keeping the 3 month rate below the overnight rate of 8.50 percent.

In 6-month bills 4.0 billion rupees was offered and 3.8 billion rupees was accepted, and in the 12-months, 6.0 billion was offered and 7.9 billion rupees was accepted.

At total of 12.0 billion rupees of bills were offered and a similar volume was sold.

Sri Lanka's ODEL raises Rs5.4bn loan for mall

ECONOMYNEXT - ODEL Plc, said had raised reached a deal with three banks to raise 5.4 billion rupees to build a mall in Sri Lanka's capital Colombo.

The building will be constructed by Odel Properties One (Pvt) Ltd, a fully owned subsdiary of ODEL the firm said in a stock exchange filing.

Hatton National Bank, Sampath Bank and the Bank of Ceylon has each committed 1.8 billion rupees for the syndicated loan.

The stock closed 24.10 rupees, unchanged.

Sri Lankan stocks hit near 6-month closing low

Reuters: Sri Lankan shares fell for a fifth straight session on Tuesday to hit their lowest closing level in nearly six months, as investors sold telecom and diversified shares.

The Colombo stock index ended 0.06 percent weaker at 6,348.53, its lowest close since Dec. 22. The index fell 0.7 percent last week, its third straight weekly fall.

Shares in Dialog Axiata Plc fell 1.4 percent, while Sri Lanka Telecom Plc closed 0.8 percent weaker and Asiri Hospital Plc ended 2 percent lower.

“The market is bottoming out and we have seen the index has been almost flat in the last two days. We expect it to bounce back once investors see any positive news,” said Hussain Gani, deputy CEO at Softlogic Securities.

Most investors have adopted a wait-and-watch approach, hoping for some positive news on the economic front, analysts said.

Turnover stood at 876.4 million rupees ($5.50 million), less than this year’s daily average of 969.4 million rupees.

Foreign investors net sold 33 million rupees worth of equities on Tuesday, extending the year-to-date net foreign outflow to 527.9 million rupees worth of shares.

A weaker rupee, political uncertainty and the recent fuel price hike weighed on sentiment in the past week with local investors remaining on the sidelines as they gauged the impact of the floods last month, brokers said.

The Sri Lankan rupee slipped to a fresh all-time low of 159.80 per dollar on Monday, pulled down by a lack of support for the local currency from exporters. 

($1 = 159.3000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)