Sri Lanka’s Expolanka June net up 12-pct, margins under pressure

ECONOMYNEXT - Sri Lanka’s Expolanka Holdings said June 2017 quarter net profit rose 12 percent to 204 million rupees from a year ago, but that its margins were under pressure.

The firm's quarterly earnings per share, now controlled by Japan’s SG Holdings, rose to 10 cents from 09 cents over the period.

The group's June quarter sales were up 6 pecent to 15.9 billion rupees, according to interim accounts filed with the stock exchange.

Profits in the group’s main logistics business fell despite growth in sales, largely owing to pressure on margins, while that of the leisure business grew.

“Maintaining margins remain a constant challenge as pressure on yields remain,” said Expolanka Group Chief ExecutiveHanif Yusoof.

Sri Lanka's Dialog net up 2.5-pct in June

ECONOMYNEXT - Sri Lanka's Dialog Axiata Plc said net profits rose 2.5 percent to 2.34 billion rupees in the June 2017 quarter from a year earlier, with a depreciating rupee adding to costs.

The group reported earnings of 29 cents for the quarter in interim accounts filed with the stock exchange.

For the six months to June, profits fell from 4.9 billion rupees to 3.92 billion rupees, with rupee depreciation hitting the group harder in the first quarter.

The Sri Lanka rupee fell 2.5 percent against the US dollar in the first quarter and 0.9 percent in the second quarter, the firm said.

Revenues rose 9.2 percent to 23.0 billion rupees in the June quarter from a year earlier, costs also rose 9.6 percent to 12.1 billion rupees and gross profits rose 8.75 percent to 10.89 billion rupees.

There was 4 percent revenue growth quarter-on-quarter and 7 percent growth year-to-date the firm said, despite economic activities being disrupted by floods. Dialog had provided 80 million rupees worth of flood aid and free services.

The core mobile firm brought 19 billion rupees for the six months from 12.4 million subscribers, with revenues up 4 percent.

Higher consumption taxes hurt revenue growth, the firm said. The group had provided 19.1 billion rupees in taxes to the government, with 5.7 billion rupees in direct taxes and levies, and 13.4 billion rupees in indirect taxes collected on behalf of the state. This worked out to about 42.2 percent of net revenues earned by the group.

Dialog TV had reached 910,000 subscribers by June 2017, revenues grew 1 percent quarter-on-quarter but was down 4 percent year-to-date to 3.0 billion rupees. Rupee depreciation had hurt forex-denominated input costs.

Net loss for the six months to June was 528 million rupees, up from 228 million rupees last year.

Dialog Broadband Networks increased year-to-date revenues 36 percent to 5.9 billion rupees, and net profits of 331 million rupees for the June quarter and 568 million for the first half compared to a loss of 40 million rupees last year.

Sri Lanka 03 month Treasury Bill yield down to 8.87-pct

ECONOMYNEXT – Sri Lankan Treasury Bill yields fell across maturities at an auction Wednesday with the 03-month bill yield plunging 16 basis points to 8.87 percent from 9.03 percent last week, the Central Bank said.

The 06-month Treasury Bill yield fell 14 basis points 9.02 percent at the auction from 9.16 percent last week, its public debt department said in a statement.

The 01-year bill yield fell 10 basis points to 9.38 percent from 9.48 percent last week.

The public debt department got Rs107 billion worth of bids and accepted bids worth Rs29.8 billion.

Sri Lanka Hayleys makes Rs150mn loss in June quarter

ECONOMYNEXT – Sri Lanka’s Hayleys group slipped into a loss of Rs150 million in the June 2017 quarter with its gloves and purification businesses hit by higher raw material costs and agriculture by bad weather.

Sales of the group, which made a profit of Rs356 million in the June quarter of the previous year, rose 21% to Rs29 billion, according to interim accounts filed with the stock exchange.

Hayleys reported a loss per share of Rs2 in the June quarter. The Hayleys share last traded at Rs294.

“We remain confident that group profits will rebound over the coming quarters as multiple strategic investments made over the recent past generate returns and contribute positively towards profitability,” Hayleys Chairman and Chief Executive Mohan Pandithage said in a statement.

Profit has also been impacted by an increase in net finance cost, which rose by 37% to Rs. 875.6 million in 1Q18 from the previous year.

This was mainly due to the increase in market rates and the higher level of investment from the group into key business segments with a view to enhancing growth potential over the medium to long term, the statement said.

The accounts showed a sharp fall in profits from gloves manufacturing along with a dip in earnings at its purification business.

The group’s textiles business profits were also down along with that from construction materials and agriculture.

However, the group’s transportation and logistics sector, its biggest business, reported a sharp increase in profits while plantations returned to profit from a loss the year before on the back of stronger tea prices at the Colombo tea auction.

Hayleys hotels business made a loss. Although the leisure sector was able to maintain relatively stable revenues, its ability to generate profits was hampered due to the substantial refurbishments being carried out at Kudarah Island Resort in Maldives, a statement said.

“The segment completed the quarter with an operating loss of Rs. 106.9 million. However, with refurbishments having since been completed just prior to the end of 1Q18, the group anticipates significant improvements in profitability moving forward.”

Hayleys group power and energy business profits were up slightly.

“Following the completion of one of Sri Lanka’s largest solar power plants in Welikande, the group’s power and energy sector recorded notable improvements in top and bottom line performance, generating Rs. 404.9 million in revenue, while operating profits within the segment rose to Rs. 229.5 million,” the statement said.

Sri Lanka’s Aitken Spence June quarter net profit up 42-pct

ECONOMYNEXT – Sri Lanka’s Aitken Spence said June 2017 quarter net profit grew 42 per cent to Rs355 million from a year ago, helped by strong gains from its power plant while maritime business earnings fell and hotels losses widened.

Group sales increased by 54 per cent to Rs11.6 billion, according to interim results filed with the stock exchange.

Earnings per share for the quarter grew to Rs0.87, up 42 per cent over the corresponding period in the previous year. Aitken Spence’s share last traded at Rs62.50.

The accounts showed earnings from its strategic investment sector, under which comes power, tripled during the period.

“Our maritime and logistics, strategic investments and services sectors contributed well to the performance of the group,” said J M S Brito, Deputy Chairman and Managing Director of Aitken Spence.

“In the tourism sector, the travels segment did well, while the hotels segment showed mixed results. The Maldives hotels improved on the last year’s performance in the first quarter, and we expect the growth momentum to continue.

“Our hotels in Sri Lanka had a challenging year despite strong performances from our flagship properties, Heritance Kandalama and Heritance Tea Factory,” said Brito.

“The resumption of full operations of its power plant in Embilipitiya, and the consolidation of RIU Sri Lanka hotel as a subsidiary with effect from the third quarter of the last financial year boosted the Group’s revenue.”

The 500-room RIU Sri Lanka located in Ahungalla is partnership between Aitken Spence and RIU Hotels & Resorts.

A subsidiary company of Aitken Spence launched a 10 MW waste-to-energy plant at Muthurajawela which will be operational in two years.

The plant will use waste generated from the Colombo municipal limits, utilizing moving grate incinerator technology, said Brito.

Sri Lanka's Access Engineering net up 13-pct

ECONOMYNEXT - Sri Lanka's Access Engineering Plc said profits rose 13.2 percent to 593 million rupees in the June 2017 quarter from a year earlier, amid higher interest costs and lower taxes.

The group reported earnings of 59 cents per share for the quarter. The stock closed at 26.60 rupees, down 10 cents, on Wednesday.

Revenues for the quarter rose 13 percent to 5.25 billion rupees, costs rose at a faster 14.8 percent to 4.0 billion rupees and gross profit grew at a slower 7.2 percent to 1.18 billion rupees. Finance costs rose to 51 million rupees from 11 million rupees.

Income tax fell to 152 million rupees from 228 million rupees, helping the bottom line. Construction firms that were taxed at 12 percent are due to be taxed at 28 percent from next year.

Sri Lankan shares recover from over 3-mth low on bargain hunting

Reuters: Sri Lankan shares recovered from a three-and-a-half month low on Thursday, snapping a nine-session losing streak, as investors bought battered shares.

The Colombo stock index rose 0.16 percent, or 10.29 points, to 6,516.32, edging up from its lowest close since April 25 hit on Wednesday. It fell 1.5 percent last week in its third straight weekly drop.

"Market moved up on bargain hunting and (there was) less selling pressure. We have seen the bottom for the moment and we have to see whether it will sustain," said Dimantha Mathew, head of research at First Capital Holdings.

Mathew said the resignation of Sri Lanka's foreign minister Ravi Karunanayake, a former finance minister, also helped boost the market.

Sri Lanka's foreign minister resigned on Thursday over corruption charges in an investigation of alleged irregularities in government bond sales, maintaining that he was not guilty of wrongdoing.

"The resignation reduces risk of a splintering in the governing coalition," said Hasnain Malik, Global Head of Equities Research at London-based frontier markets investment bank Exotix Capital, active in South Asia.

The coalition government between President Maithripala Sirisena's centre-left party and Prime Minister Ranil Wickremesinghe's centre-right party had differences over the alleged corruption deal, risking the stability of the government.

"We regard Sri Lanka equities as cheap versus history and the exchange rate as lower risk than before, now it is under the IMF umbrella, but we still see a struggle for sustainable growth," Malik said in an emailed comment.

Foreign investors net bought shares worth 98.5 million Sri Lankan rupees ($642,740.62) on Thursday, extending their year-to-date net inflow to 26.7 billion rupees.

Turnover stood at 306.6 million rupees, less than half of this year's daily average of around 880.6 million rupees.


Shares of Dialog Axiata Plc rose 0.9 percent while, Ceylon Tobacco Company Plc gained 1.1 percent and Sampath bank Plc ended 2.9 percent higher.

Analysts, however, expect equities to gain due to a fall in government bond yields.

Short-term treasury-bond yields fell between 10 basis points (bps) and 16 bps at a weekly auction on Wednesday, while the yields on a 59-month bond dropped by 99 bps and that on a 118-month bond fell by 78 bps at the last week auction. ($1 = 153.2500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)