ohn Keells Group revenue up 10%, profit to equity holders up 37%

John Keells Group revenue at Rs.32.57 billion for the period under review is an increase of 10 per cent over the Rs.29.62 billion recorded in the previous financial year, Susantha Ratnayake, chairman of John Keells Group informed its shareholders on Tuesday.

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Some excerpts from his message to the shareholders are reproduced below.

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The cumulative revenue for the first half of the financial year 2018/19 at Rs.62.74 billion is an increase of 11 per cent over the revenue of Rs.56.45 billion recorded in the corresponding period of the previous financial year.

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The profit attributable to equity holders in the second half at Rs.5.10 billion is an increase of 37 per cent over the corresponding period of the previous financial year, whilst the first six months performance at Rs.7.28 billion is an increase of 11 per cent over the previous year. The profit attributable to equity holders includes a recognition of a deferred tax asset at Union Assurance PLC.

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The Group profit before tax (PBT ) at Rs.4.69 billion in the second quarter of the financial year 2018/19 is a decrease of 5 per cent over the Rs.4.95 billion recorded in the previous financial year. The cumulative PBT for the first half of the financial year 2018/19 at Rs.7.60 billion is a decrease of 16 per cent over the PBT of Rs.9.04 billion recorded in the same period of the previous financial year.

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The Company PBT for the second quarter of 2018/19 at Rs.2.61 billion is an increase of 20 per cent over the Rs.2.18 billion recorded in the corresponding period of 2017/18. The Company PBT for the first six months of the financial year 2018/19 at Rs. 5.05 billion is a decrease of 9 per cent over the previous financial year.

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The Transportation industry group PBT was Rs.1.06 billion in the second quarter of 2018/19 [2017/18 Q2: Rs.1.07 billion]. The market share and profits of the Group’s Bunkering business, Lanka Marine Services (LMS), increased as a result of a growth in volumes and improved margins. Whilst South Asia Gateway Terminals (SAGT ) recorded a 12 per cent growth in throughput over the corresponding period of the previous financial year, a decline in the volume of domestic TEUs impacted profitability. The Logistics business recorded a strong performance due to an increase in throughput. The design work and obtaining building approvals for the new 200,000 sq. ft warehouse in Muthurajawela is ongoing, and construction is expected to commence in the fourth quarter of 2018/19.

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The Leisure industry group PBT of Rs.453 million in the second quarter of 2018/19 is a decrease of 46 per cent over the second quarter of the previous financial year [2017/18 Q2: Rs.838 million].

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The decline in profitability is mainly attributable to the City Hotels sector, the partial closure of “Ellaidhoo Maldives by Cinnamon” for refurbishment and the closure of “Cinnamon Hakuraa Huraa Maldives” for the reconstruction of the hotel. Whilst the City Hotels sector maintained average room rates, profitability was impacted by a decline in occupancies, due to the increased supply of room inventory within Colombo and the lower volumes generated through the corporate segment.

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However, the year-on-year total number of room nights occupied in the city increased by 9 per cent during the quarter under review, demonstrating the steady absorption of new room capacity.

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Profitability in the Sri Lankan Resorts segment was impacted by a decline in occupancies, and an exchange loss on the translation of its foreign currency denominated debt arising from the depreciation of the Rupee during the quarter. The business will however accrue the benefits of the depreciation on account of its foreign currency denominated revenue streams over the ensuing periods.