Sri Lanka Dockyard makes modest recovery in June 2016 quarter

ECONOMYNEXT – Sri Lankan shipbuilder Colombo Dockyard said it made a net profit of Rs55 million in the June 2016 quarter as it recovered from losses caused by the cancellation of contracts owing to the oil price slump.

The yard, majority owned by Japan’s Onomichi Dockyard, had suffered a loss of Rs77 million in the March 2016 quarter after it was forced to cancel a new building order and lower prices for new ships ordered by clients serving the oil industry.

Colombo Dockyard had made a profit of Rs182 million in the June 2015 quarter.

Interim results filed with the stock exchange showed June 2016 quarter sales fell 29% to Rs2.6 billion from a year ago.

Earnings per share for the June 2016 quarter were 76 cents against Rs2.53 the year before.

For the six months ending June 2016, Colombo Dockyard reported a loss per share of 30 cents against EPS of Rs4.41 a year ago.

Sri Lanka's brewery makes Rs500mn loss after floods

ECONOMYNEXT - Sri Lanka's Ceylon Beverage holdings, brewer for Lion and Carlsberg in Sri Lanka lost 501 million rupees in the June quarter as a floods disrupted production, interim accounts filed with the Colombo Stock Exchange showed.

Revenues fell 36 percent to 5.93 billion rupees in the June 2016 quarter from a year earlier.

Sri Lanka experienced severe flooding in a low lying area near the capital Colombo where the factory is located.

Production is expected to resume later this year.

Lion Brewery said its brands will be made in breweries owned by its partner Carlsberg group.

The government has reduced duty on the firm's imports to allow it to import and sell beer.

Sri Lanka's The Sunday Times newspaper said customs duty for beer with alcohol of less than 5 percent has been cut to Rs129 per litre from Rs500 and for beer with over 5 percent alcohol to Rs246 from Rs500.

The firm will also pay taxes such as port and airport levy.

The import levies paid by the firm is expected to be broadly the similar to the excise duties it would have paid on domestically produced beer.

Sri Lanka's Bank of Ceylon net up 34.8-pct in June

ECONOMYNEXT - Profits at state-run Bank of Ceylon, the country's largest lender by assets grew 35.5 percent from a year earlier to 4.9 billion rupees helped by loss provisions reversals but net interest income fell amid rising rates.

Group interest income rose 14.1 percent to 33.4 billion rupees in the quarter and interest expenses rose at a faster 24.9 percent to 16.4 billion rupees slowing net interest expense grew only 0.2 percent to 12.89 billion rupees.

The bank grew customer loans 5.7 percent to 900 billion rupees from 851 billion rupees, in the six months to June.

It is also one of the biggest holders of government securities. During the six months it cut financial investments - held to maturity, to 235 billion rupees from 246 billion rupees in June.

There was only 15.7 billion rupees in the available for sale portfolio which is marked to market.

However when interest rates rise, the holding cost of the portfolio is reflected in net interest income.

Sri Lanka's interest rates are correcting after being held down by term repo terminations and outright money printing in 2015 as the budget deficit expanded.

The bank reversed 180 million rupees of loan loss provisions, compared to 3.4 billion rupees, provided last year, helping boost profits.

Fee and commission income was also down 13 percent to 1.25 billion rupees.

AIA Sri Lanka reports solid 1H 2016 results

AIA Insurance Lanka PLC and its subsidiaries consolidated revenue increased by 19 % to Rs 6,852 million driven by gross written premium (GWP) growth of 26 percent to Rs 4,858 million for the six months ended June 30, 2016.

The growth in GWP was mainly driven by persistency improvements and a change in premium mode mix. Conventional life GWP increased 32 percent to Rs 4,373 million and investment income went up 25 percent to Rs 2,297 million, benefitting from the increase in interest rates.

Consolidated profit after tax amounted to Rs120 million, an increase of 38 percent compared with Rs 87 million in the corresponding period in 2015. The surplus of the life insurance business is reported annually at the year end and is therefore not included in the half-year profit. Shah Rouf, Chief Executive Officer of AIA Sri Lanka said, “AIA Sri Lanka’s consolidated revenue was boosted by a solid 26 percent increase in our GWP compared with the first half of 2015. We believe this growth momentum will strengthen further in the second half.

AIA remains committed to growing our business both quantitatively and qualitatively and our execution of growth strategies this year has reflected this. We are always looking for ways to make doing business with us easy for our customers as well as our Wealth Planners. As part of this, the launch of mCash mobile phone wallet last quarter has already become a key premium collection method.”

William Lisle, Chairman of AIA Sri Lanka said, “Our initiatives under Premier Agency Strategy and Bancassurance partnerships are showing excellent results and we are confident that AIA Sri Lanka is well positioned to benefit from the growth momentum of the Sri Lankan life insurance market.”

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Amãna Bank Net Operating Income crosses Rs. 1 bn

Amãna Bank recorded another successful half year of banking operations by achieving a Profit Before Tax of Rs 78 million for the six months ending 30 June 2016, despite challenging and competitive market conditions.

Financing Income for the first six months improved remarkably by 35.7% to Rs 1.8 Billion indicating the Bank’s strong top line performance in its core banking activities, predominantly focusing on SMEs. Of this, Rs 950.9 million was recorded in Q2 2016 showcasing a significant growth of 40.7% in comparison to the corresponding achievement in 2015. Net Financing Income from core banking activities in 1H, grew year-on-year by 23.5% to reach Rs 866.3 million.

The Bank also recorded Rs 98.3 million in Net Fee and Commission Income during the first half reflecting a year-on-year growth of 35.2%.

Net Operating Income for the first six months surpassed the 1 billion mark to close the half at Rs 1.1 Billion, growing by 19.2% from 1H 2015. The Bank’s Total Assets grew during 1H to read at Rs 52.4 billion while its Deposit and Advance portfolios continued its upward trend ending at Rs45.4 billion and Rs 36.7 billion respectively. Despite the growth in advances and gradual seasoning of the asset book, the Bank continued to maintain an industry low Gross Non-Performing Advances Ratio of 0.95%.

Chief Executive Officer Mohamed Azmeer said, “the results achieved reflect the growing confidence the customers have placed in our people friendly banking model for which I am sincerely thankful. I am optimistic that this performance trend will continue for the second half of the year as we make steady progress to achieve the goals outlined in our 5 year strategic plan, with the core focus being SMEs.”

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Sri Lanka's Dankotuwa Porcelain boosts India sales

ECONOMYNEXT - Dankotuwa Porcelain, a Sri Lanka based tableware maker said it boosted sales to India 19 percent in 2016, and is facing competition in export markets by changing designs and catering to emerging trends.

Dankotuwa had merged operations with Royal Fernwood Porcelain, another Sri Lanka based manufacturer. In 2016 the firm reported profits of 50 million rupees, up from a loss of 11 million last year.

At group level it lost 15.9 million rupees against a 157 million loss a year earlier.

The firm exported 827 million rupees of tableware. The firm was facing competition from China and Bangladesh and India.

However it had boosted Indian sales by 19 percent last year. Though sales in Chennai were steady, Dankotuwa said it had expanded into Northern India.

Europe, its traditional market was difficult amid weak economic conditions and price competition, Dankotuwa said.

"The market increasingly needs quicker lead times, prompt co-ordination and communication. Trends have shifted from formal dining to more casual dining in most markets which were popular for formal dining," the firm said.

"As such, we focus on developing new innovative products, designs, shapes, demands investment in modern technology and people.

"It is through these efforts and continuous customer relationships that company will gain greater brand value, with a much bigger share of the overall global market of porcelain."

The Finance Company in more losses in June quarter

ECONOMYNEXT - Sri Lanka's The Finance Company Ltd, a troubled non-bank lender of the former Ceylinco group lost 333 million rupees in the June 2016 quarter, down from 373 million rupees a year earlier.

The publicly traded company reported earnings of 2.08 rupees per share.

The lender said interest income grew 1 percent to 967 million rupees, interest income grew 12 percent 884 million rupees, interest expenses fell 3 percent to 873 million rupees and interest income was a positive 11.2 million rupees, compared to a loss of 57 million rupees last year.

Loans loss provisions were 130 million rupees up from 102 million a year earlier.

Fee and commission income grew 20 percent to 25.8 billion rupees.

The firm has assets of 23.7 billion rupees in its books and customer deposits of 29.4 billion rupees and other borrowings of 4.9 billion rupees.

With 19 billion rupees of accumulated losses, the firm has a 19.4 billion rupee hole in the balance sheet (negative net assets.)

The Finance Company, was one of a series of finance companies that got into trouble during the 'Rata Perata' credit bubble fired by the Central Bank and Treasury with low interest rates and steady currency depreciation from 2004 onwards.

Several finance companies collapsed after rates corrected in 2008 amid a balance of payments crisis.

In 2011 however tight peg defence push up rates and arrested another housing, though there was a stock market boom.