Sri Lanka’s JKH group March net profit down 68-pct

ECONOMYNEXT – Sri Lanka’s John Keells Holdings group net profit fell 68 percent to 3.2 billion rupees in the March 2019 quarter from a year ago, interim accounts showed.

Quarterly sales rose eight percent to 36.2 billion rupees over the period while cost of sales rose by 10 percent to 27.5 billion rupees with gross profit virtually flat at 8.6 billion rupees.

Earnings per share for the March 2019 quarter were 2.41 rupees. The share closed at 138 rupees Friday, down 50 cents or 0.4 percent.

EPS for the year to March 2019 fell to 11.13 rupees with net profit down 27 percent to 15.3 billion rupees while sales rose 12 percent to 135.5 billion rupees.

JKH’s finance costs shot up 900 percent to 1.2 billion rupees.

A company statement said the lower quarterly profit was mainly due to the one-off surplus and optimal surplus transfer in 2017/18 by the Life Insurance business, Union Assurance (UA), which cumulatively amounted to seven billion rupees.

The annual life insurance surplus of UA was 1.1 billion rupees in 2018/19.

“Profits of UA were further impacted by mark-to-market losses on its equity investment portfolio due to a decline in the stock market,” the statement said.

JKH’s hotel business was impacted by lower occupancies in the city hotels sector due to the increase in room inventory within Colombo and the closure of Cinnamon Hakuraa Huraa Maldives for the construction of a new hotel.

JKH’s property business was impacted since the previous year included a one-off revenue recognition at Rajawella Holdings Limited on the sale of leasehold rights and lower fair value gains on investment property in 2018/19 in comparison to 2017/18.

“The performance for the quarter also included an exchange loss at the holding company as a result of the appreciation of the rupee, in comparison to an exchange gain in the fourth quarter of 2017/18.”

Sri Lanka's Cinnamon Life project costs rise amid delay

PROGRESS: The structural works of Cinnamon Life is complete.

ECONOMYNEXT - Cinnamon Life, promoted by Sri Lanka's John Keells Holdings Plc, said cost were up 10 from the original 805 million US dollars and the commercial, hotel and residential development would be completed by 2021.

"The date for project completion now takes into account the staggered opening of some elements of the project and completion of all works including the detailed interior design work," Chairman Krishan Balendra told shareholders.

"Accordingly, the completion dates of the residential and office towers will be March 2020, whilst the operations of the hotel and retail mall are expected to commence in March 2021."

In 2013 the project was expected to finish in 2018.

The 805 million US dollar estimated was without taxes and interest costs he said.

In 2013, the firm said the cost is estimated at 820 million US dollars.

At the time the rupee was at 131 to the US dollar. Since then the central bank has busted the rupee to 176 to the US dollar, through a combination of policy errors and deliberate real effective exchange rate targeting.

The central bank with its unstable soft-pegged exchange rate is perhaps the biggest economic challenge to the people, analysts have said now that a 30 - year civil war has ended.

John Keells said its apartments priced in dollars was seeing weaker demand after a recent rupee collapse.

The pre-sales of the Residential Towers; "The Suites of Cinnamon Life" and "The Residencies at Cinnamon Life" was 65 percent of total floor area, despite the general slowdown in the residential market.

"Given the steep depreciation of the Rupee and the political disruption in the country during the last quarter of 2018, the traction on the apartment and office sales has been subdued," Balenda said. "The momentum is expected to improve as completion draws nearer.

The total revenue from the sales of the residential apartments and 10 floors of the commercial office space of the "Cinnamon Life" project is estimated to be 250 million US dollars.

The dollar sale price however hedges the US dollar borrowings. The repayments of a 395 million US dollar loan has been had also been delayed to match the delay, he said.

Sri Lanka’s Dialog Axiata stems voice revenue decline, data grows strongly

ECONOMYNEXT – Sri Lanka’s dominant mobile phone operator Dialog Axiata has said it managed to stem the fall in voice revenue in 2018 while data sales rose strongly.

“While local voice revenues remained stable, the emerging segments of mobile broadband, fixed and digital services contributed significantly to the overall profile,” Dialog Axiata group chief executive Supun Weerasinghe said.

Mobile broadband sales rose 32 percent in 2018 from the year before while revenue from fixed and digital services grew 29 percent, he said.

“Revenue growth combined with our continued focus on operational improvements led to group EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) growing 28 percent year-on-year to 43.5 billion rupees for the 2018 financial year,” he told shareholders in the company’s annual report.

Dialog Axiata group EBITDA margin rose slightly to 39.8 percent in 2018 from the previous year.

The annual report’s operations review said that despite the continued threat from ‘Over-the-Top’ (OTT) services, voice revenue experienced only a moderate decline of one percent in 2018 from the year before.

New customer acquisitions from aggressive regional campaigns and successful new product launches supported the sustenance of voice revenue, it said.

“Data revenue continued its strong growth momentum during the year to record a growth of 32 percent year-on-year driven by continued increase in smartphone penetration, 4G device penetration supported by rapid 4G conversion, coverage expansion and upgrades to data related infrastructure.”

Weerasinghe said that in 2018, Dialog’s mobile business continued to strengthen its market leadership, adding about a million subscribers to reach a mobile subscriber base of 13.8 million as at December 2018, up eight percent from the previous year.

Sri Lanka’s Hemas Holdings March quarter net profit up 47-pct

ECONOMYNEXT – Sri Lanka’s Hemas Holdings group net profit rose 47 percent to 863 million rupees in the March 2019 quarter from a year ago with its consumer business in the red and lower earnings from healthcare while tourism profits almost doubled.

Hemas Holdings group chief executive Steven Enderby said they were concerned about the impact of April suicide bombings of churches and hotels and communal unrest on domestic consumer demand.
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Quarterly earnings per share were 1.45 rupees, interim accounts showed. The share was trading at unchanged at 69 rupees

In the financial year to 31 March 2019, EPS was 5.65 rupees with net profit up 25 percent to 3.4 billion rupees and sales up 29 percent to 64 billion rupees

Quarterly sales rose almost seven percent to 16 billion rupees in the March 2019 quarter from a year ago while cost of sales rose 4.4 percent to 10.4 billion rupees with gross profit up 11.7 percent to 5.6 billion rupees.

The accounts showed the Hemas group consumer business slipped into the red in the March quarter with a loss of 70 million rupees compared with net profit of 110 million rupees the previous year.

Net profits from Hemas group’s healthcare business, its biggest, were slightly lower at 503 million rupees in the quarter while profit from its hotel and travel business almost doubled to 403 million rupees.

Profit from the group’s mobility business fell sharply to 59 million rupees from 146 million rupees the year before.

“Profitability during the fourth quarter was challenging due to duty increases coupled with currency devaluations impacting the price of raw materials,” Hemas Holdings group chief executive Steven Enderby said.

“Marketing and trade spends were higher in the quarter as we invested behind the line-up of relaunches brought to market during late Q3.”

Enderby said Hemas group’s healthcare business profits fell during the year but began to recover in the fourth quarter when the rupee appreciated by four percent against the US dollar.

Hemas pharmaceutical distribution saw strong sales growth stemming from the latest addition of new principals last year and continued efforts to improve the existing portfolio.

“However, the impact of price regulation and significant currency depreciation continues to compress margins,” Enderby said.

“Additionally, the increase in interest costs from working capital funding added to pressure on earnings.”

Enderby said Hemas was “reviewing every cost to see how we can reduce losses from the decline in tourist arrivals” after the April bombings.

“We are also concerned about the impact of the terrorist events and communal unrest on domestic consumer demand.”

Sri Lanka stocks slip in thin trade; rupee edges up

Reuters: ** Sri Lankan shares fell for the second straight session on Monday in thin trading volume amid worries over economic slowdown and lack of investor appetite for risky assets. 

** Traders said the Easter day bombings and aftermath violence weighed on investor sentiment. Most investors have shied away from the market since the April 21 bombings that killed more than 250 people. 

** Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the Easter Sunday bombings, junior finance minister Eran Wickremeratne told Reuters on Tuesday. A Reuters poll has predicted the growth to slump to its lowest in nearly two decades this year. 

** The International Monetary Fund (IMF) on May 14 approved the disbursal of a $164 million tranche of a loan programme, bringing the total disbursed to more than $1.16 billion. 

** The benchmark stock index ended 0.07% weaker on Monday at 5,291.49. It rose 0.67% last week, recording its first weekly gain in three. The bourse has fallen 12.6% so far this year. 

** Turnover was 444.6 million rupees ($2.52 million), less than this year’s daily average of around 548.6 million rupees. Last year’s daily average was 834 million rupees. 

** Foreign investors bought a net 183.1 million rupees worth of shares on Monday, but they have been net sellers of 5.7 billion rupees worth of equities so far this year. 

** The rupee ended slightly firmer at 176.20/30 per dollar, compared with Friday’s close of 176.30/45, market sources said. 

** Analysts, however, expect the currency to weaken as money flows out of stocks and government securities. 

** The rupee fell 0.23% last week but is up 3.6% for the year. Exporters had converted dollars as investor confidence stabilised after a $1 billion sovereign bond was repaid in mid-January. 

** The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. 

** Foreign investors bought a net 2.1 billion rupees worth of government securities in the week ended May 22, but the island nation saw a net foreign outflow of 19.1 billion rupees so far this year, central bank data showed. 

** Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds. 

($1 = 176.2000 Sri Lankan rupees) 

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

Sri Lanka stocks snap 5 days of gains in light trade; rupee steady

Reuters: ** Sri Lankan shares snapped five straight sessions of gains on Friday in low trade amid worries over economic slowdown and lack of investor appetite for risky assets. 

** Traders said the Easter day bombings and aftermath violence weighed on investor sentiment. Most investors have shied away from the market since the April 21 bombings that killed more than 250 people. 

** Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the Easter Sunday bombings, junior finance minister Eran Wickremeratne told Reuters on Tuesday. A Reuters poll has predicted the growth to slump to its lowest in nearly two decades this year. 

** The International Monetary Fund (IMF) on May 14 approved the disbursal of a $164 million tranche of a loan programme, bringing the total disbursed to more than $1.16 billion. 

** The benchmark stock index ended 0.2% weaker on Friday at 5,295.11. But it rose 0.67% for the week, recording its first weekly gain in three. The bourse has fallen 12.5% so far this year. 

** Turnover was 283.6 million rupees ($1.61 million), around half of this year’s daily average of around 549.8 million rupees. Last year’s daily average was 834 million rupees. 

** Foreign investors sold a net 70.2 million rupees worth of shares on Friday, extending the year-to-date net foreign outflow to 5.9 billion rupees worth of equities. 

** The rupee ended steady at 176.30/45 per dollar, market sources said. 

** Analysts, however, expect the currency to weaken as money flows out of stocks and government securities. 

** The rupee fell 0.23% during the week but is up 3.6% for the year. Exporters had converted dollars as investor confidence stabilised after a $1 billion sovereign bond was repaid in mid-January. 

** The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. 

** Foreign investors sold a net 433.2 million rupees worth of government securities in the week ended May 15, extending net foreign outflow to 21.2 billion rupees so far this year, central bank data showed. 

** Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds. 

($1 = 176.3000 Sri Lankan rupees) 

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

Sri Lanka stocks edge up in light turnover; rupee up

Reuters: ** Sri Lankan shares closed slightly firmer on Thursday and extended gains into a fifth session, but trading volume slumped to a near five-month low amid worries over economic slowdown and lack of investor appetite for risky assets. 

** Traders said the Easter day bombings and aftermath violence weighed on investor sentiment. Most investors have shied away from the market since the April 21 bombings that killed more than 250 people. 

** Sri Lanka is unlikely to hit its full-year economic growth target of 3-4% following the Easter Sunday bombings, junior finance minister Eran Wickremeratne told Reuters on Tuesday. A Reuters poll has predicted the growth to slump to its lowest in nearly two decades this year. 

** The International Monetary Fund (IMF) on May 14 approved the disbursal of a $164 million tranche of a loan programme, bringing the total disbursed to more than $1.16 billion. 

** The benchmark stock index ended 0.19% firmer on Thursday at 5,305.80. It fell 1.28% last week. 

** Turnover was 83.5 million rupees ($473,490), the lowest since Jan. 4 and well below this year’s daily average of around 552.6 million rupees. Last year’s daily average was 834 million rupees. 

** Foreign investors sold a net 8.4 million rupees worth of shares on Thursday, extending the year-to-date net foreign outflow to 5.8 billion rupees worth of equities. 

** The rupee ended 0.2% firmer at 176.30/45 per dollar, compared with Wednesday’s close of 176.65/80, on exporter dollar sales, market sources said. 

** Analysts, however, expect the currency to weaken as money flows out of stocks and government securities. 

** The rupee gained 0.1% last week and is up 3.4% for the year. Exporters had converted dollars as investor confidence stabilised after a $1 billion sovereign bond was repaid in mid-January. 

** The rupee dropped 16% in 2018 and was one of the worst-performing currencies in Asia. 

** Foreign investors sold a net 433.2 million rupees worth of government securities in the week ended May 15, extending net foreign outflow to 21.2 billion rupees so far this year, central bank data showed. 

** Investor sentiment was damaged at the end of last year when President Maithripala Sirisena abruptly removed Prime Minister Ranil Wickremesinghe and then dissolved parliament. A court later ruled the move unconstitutional, but the political turmoil led to credit rating downgrades and an outflow of foreign funds. 

($1 = 176.3500 Sri Lankan rupees) 

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