ECONOMYNEXT – Sri Lanka’s John Keells Holdings group, which has interests in hotels, logistics and financial services, has reported profits of 7.3 billion rupees for the March 2024 quarter, helped by stronger margins and higher net interest income.
The group reported earnings of 5.17 rupees per share. For the year to March the group reported earnings of 8.06 rupees per share on total profits of 11.2 billion rupees, down 18.1 billion rupees in interim accounts filed with the Colombo Stock Exchange.
Group revenues for the March 2024 quarter was up 19 percent to 86.6 billion rupees including 4.5 billion rupees from the insurance unit.
Cost of sales went up 16 percent to 63.8 billion rupees and gross profits were up 30 percent to 16.7 billion rupees.
Finance costs fell from 5.4 billion rupees to 2.4 billion and finance income went up from 3.4 billion rupees to 71. Billion rupees.
The firm said bunkering volumes went up 50 percent due to the Red Sea crisis in the March quarter though domestic sales seen in an economic crisis were no longer there.
South Asia Gateway terminals also saw a 13 percent growth in volumes.
Ice creams grew 14 percent and beverages 42 percent as the central bank kept inflation low.
“The volume growth is encouraging, particularly in Beverages, where selling prices of certain SKUs were increased to cover the higher sugar tax and VAT rate increase,” JKH told shareholders.
“Favourable weather conditions, where the country encountered higher than usual temperatures, also supported the growth in volumes.”
Sri Lanka’s central bank has kept inflation low since September 2022, with strong external anchoring of money allowing the rupee to appreciate, temporary putting on hold its 5 to 7 percent a year annual domestic inflation targets, analysts have said.
“Profitability of the Supermarket business was driven by growth in same store sales of 11%, driven by a growth in footfall of 14%, the firm said.
“The business is expected to see an improvement in energy costs in 2024/25 due to the downward revision of electricity tariffs in March 2024.”
Electricity prices are also revised down with a stronger currency.
Exchange rate appreciation had reduced rupee (nominal) profits from dollar denominated business.
However the rupee value of a dollar loan in the Watefront Properties falls when the currency appreciates.
With change in the accounting from August 2023, the appreciation had resulted in a non-cash exchange gain of 3 billion on a 225 million term loan WPL, which is recognised under Finance Income in the Leisure industry group. (Colombo/May22/2024)