LNP – Opening costs of “City of Dreams” dents JKH profitability

John Keells Holdings (JKH) Group EBITDA stood at Rs.8.09 billion in the second quarter of the financial year 2024/25 which is a decrease of 4 per cent against Group EBITDA of Rs.8.42 billion recorded in the previous financial year, JKH Chairman Krishan Balendra said in his statement on the quarterly results of the company.

However excluding ‘City of Dreams Sri Lanka’ costs, Group EBITDA for the second quarter of 2024/25 recorded an increase of 8 per cent to Rs.9.28 billion (2023/24 Q2: Rs.8.62 billion).

The statement said that Group EBITDA for the quarter under review included substantial pre-opening costs pertaining to the ramp-up associated with the opening of the ‘Cinnamon Life’ hotel at the ‘City of Dreams Sri Lanka’.

After the conclusion of the Presidential elections, Sri Lanka’s stability and recovery momentum has been sustained with business and consumer confidence, and the markets, rebounding as seen from the relevant indices and indicators. The progress on the international sovereign bond restructuring programme, which is essential for Sri Lanka’s macroeconomic stability, is encouraging, it said.

The 687-key ‘Cinnamon Life’ hotel, restaurants and banquet facilities commenced operations on October 15. While operations have commenced and continued for only a few weeks, the feedback received to date from customers have exceeded expectations. Fit-out works relating to the remainder of the project comprising of the 113-key ‘Nuwa’ hotel and gaming operations are progressing well and expected to be operational along with the retail mall, with overall completion of these elements scheduled for mid-CY2025.

The construction and installation works on the West Container Terminal (WCT-1) at the Port of Colombo is progressing well. The first batch of quay and yard cranes arrived in September 2024, following which the commissioning is expected to be completed by the third quarter of 2024/25. The first phase of the terminal is slated to be operational in the fourth quarter of 2024/25.

The performance of the Leisure industry group was impacted by the pre-opening costs pertaining to the ‘Cinnamon Life’ hotel, together with the decline in profitability mainly attributable to the Maldivian Resorts due to the translation impact of a stronger Rupee as compared to the corresponding period in the previous financial year.