Sri Lanka listed companies hit by Coronavirus, some firms resume work
ECONOMYNEXT – Sri Lanka’s publicly traded companies have said Coronavirus and curfews had badly hit their cashflows and revenues but some export and telecom firms are seeing demand and construction activity has also resumed.
Tourism is one of the most badly hit, as are apparels.
Glove maker Haycarb said it is seeing strong demand. Some apparel firm including listed fabric maker Teejay Lanka is switching to Coronavirus protection items like masks.
John Keells Holdings a diversified group said the impact was uncertain and was evolving. Many firms have cut salaries.
Banking and telecommunication have seen a growth in usage. Sri Lanka Telecom said it has seen strong demand but regulatory order not to disconnect customers was making it difficult to collect revenue.
Sri Lanka imposed a state of ‘work-at-home’ in mid-March to combat Coronavirus and later imposed imposed stricter island-wide curfews, though many essential services were allowed to operate and export firms were also given the go ahead to work.
Tokyo Cement said construction projects resumed work but many distributors are closed in curfew.
In order to keep the businesses afloat are seen to be focusing on managing its liquidity and short-term costs reduction measures.
Here is a list of companies which publicly disclosed the COVID-19 impact:
1. Haycarb PLC – The demand for coconut shell based activated carbon was not adversely affected thus far, while new marketing opportunities have opened for certain activated carbon products such as face masks. However, sales volumes decreased due to the closure and partial operations caused by lockdowns and curfews. The construction, commissioning and handover of water and waste water treatment solutions in Sri Lanka and Maldives slowed down, and milestones were postponed during the period.
The Company expects escalation of operating costs through increases in raw material costs due to currently ongoing lockdowns, increase in cost of logistics and expenditure related to special hygienic and safety processes and systems implemented to protect employees and other stakeholders. The demand for activated carbon and activated carbon products is expected to remain strong in some of our key applications like water purification, air purification and gold extraction. These expectations are strictly conditional and subject to prevailing conditions globally at the time of this disclosure, said the company.
2. Teejay Lanka PLC said that in response to the decision taken by the Government of Sri Lanka to deal with the COVID-19 pandemic, it took immediate measures to close down its plants in Sri Lanka by the 17th of March 2020 and the plant in India on the 20th March 2020. Due to the closure of the plants there was no production during the subsequent 3 weeks.
The company’s main issue post lockdowns were due to its customers requesting for extensions of credit periods and also proposed cancellation of some of the orders. However, it is looking in to developing fabric to produce PPEs
3. “The impact on the financial year 2020/21 cannot be ascertained at this point of time given the uncertain and evolving situation,” John Keells Holdings PLC, Sri Lanka’s largest conglomerate spread across various businesses said.
John Keells said that it monitors weekly cash targets and spend control initiatives including a freeze on all non-essential capital expenditure and stringent expense control measures.
JKH measures also includes a reduction in executive staff remuneration ranging from 5 to 60 percent till June 2020, subject to further review depending on the macro and operating environment.
4. Lion Brewery PLC said it suspended its operations in line with the curfew imposed and whilst the curfew has been lifted in most parts of the country, the curfew in Gampaha where the company’s offices and brewery are located, still remains therefore it is waiting for the curfew to be lifted to commence operations.
Likewise, the company expects a drop in demand across all FMCG’s including beer due to consumer demand hence anticipates the impact to reflect in the on-going financial year.
5. Tokyo Cement Company PLC, said since the company has been included in the list of essential services to operate, as a result we have been able to maintain production operations at our factory, save a few days in March.
However, the lockdown and curfews, in addition to the closure of most construction sites, hve restricted the distribution and retail of cement and dry mortar goods across the island.
The company said te demand for construction materials fell from the fourth week of March to April end. However, April is the lowest performing month due to the Sinhala-Tamil new year.
They also added that over the pat few weeks, construction activity has resumed, especially outside the Western Province, increasing cement and dry-mortar consumption.
6. Commercial Development Company PLC, which provides services to Commercial Bank of Ceylon PLC said the direct impact on the business operations is at a minimal level.
7. Seylan Development PLC said the impact on its business has been minimal since the company’s main source of income is from leasing of office space at the Seylan Towers. With 80 percent of the income generated from leasing its office space to its parent company Seylan Bank PLC.
8. “In the short run, the company is experiences positive impacts in area such as Broadband, online services and IPTV related services due to the increased utilization from residential sector,” Sri Lanka Telecom said.
“At the same time, there are opportunities for future as many understands and increased enthusiasm to online and distance services which are enriched by connectivity services.”
However, Telecom said with regulatory instructions to refrain from disconnecting unpaid subscribers, the collection of billed revenue was a challenge.
9. Softlogic Life Insurance PLC said, since the first COVID 19 case in January 2020, the company has activated its BCP in stages by securing and sanitizing work locations, splitting teams to work from from home and enabling IT connectivity towards digital modes to enable continuous work from home so as not to interrupt any services to our customers.
10. Tea Smallholder Factories PLC – The factories are functioning as normal since the outbreak of COVID 19, maintaining social distancing and taking required precautions as advised by the health officials. The harvesting of Green Leaf by the smallholders is continuing and arrangements are in place for the collection and receipt of same by the factories. Tea auctions were conducted via an electronic platform in April 2020 and is expected to continue.
Tea prices have improved during this period due to the exporters purchasing actively to cover the orders. The Tea prices could be impacted in the future with the prevailing COVID 19 pandemic in Europe , Russia, Iran and other consumer countries, declining oil prices and devalued currencies.
11. Chevron Lubricants Lanka PLC – said it began preparations for an outbreak of COVID-19 in January as part of its Emergency Response Planning process. “ To date there have been zero reported cases of COVID-19 within our company employees and their immediate families. Our head office, blending plants and warehouse facilities have been virus free as of this writing. Since March 16th, all non-essential staff commenced their daily work from their homes while essential staff to support blending and distribution of lubricant oils are reporting yo our plant in Sapugaskanda to support operations.
“Blending and filling operations are lower than normal due to the curtailed economic activities domestically and in our export markets due to the prevailing curfew/lockdown conditions/ The company is prioritizing operations to support essential services in all of our markets. The company is producing lubricant oils for essential services such as power generation, agriculture, fisheries sector and government transportation services.”
12. Hayleys PLC – Comprising the Group’s interests in Hand Protection, Purification, Textiles and Eco Solutions this sub-group of sectors which are export-oriented businesses collectively contributes to 28% of the consolidated revenue. We anticipate a degree of resilience for certain products in the Purification and Hand Protection Sectors, given the increasing importance of health and safety considerations.
Similarly, the Textiles Sector on the other hand, has seen a shift in orders from fashion and sport centric to fabric suitable for the health sector which is presently in large demand. Manufacturing operations in Sri Lanka which were temporarily halted following the imposition of curfew in the 3rd week of March, have now recommenced, and are rapidly ramping up production with some manufacturing plants, now at 85% operating capacity, whilst production facilities in other regions such as Indonesia and Thailand are currently fully operational. Order books in the Hand Protection, Purification and the Textile sectors remain strong, and we will continue to fulfil customer requirements.
13. Commercial Credit PLC said that branches outside the Colombo, Gampaha, Kalutara and Puttlam districts are operating normal hours since 20th April 2020.
The Company executed its Business Continuity Plan and has been operating from remote locations where required and has operated during non- curfew hours where possible. Additional measures to protect the health and safety of customer and staff, as well measures to reduce the spread of the virus were put in place.
“Circular No. 5 dated 27th March issued by Central Bank of Sri Lanka, to give effect to the Cabinet Decision required the Company to provide a debt moratorium to eligible customers. The extent of the moratorium varies, and customers are eligible to apply until 15th May 2020. The significant proportion of our customer base, such as the three-wheeler, motorbike lessees, are entitled to apply for the moratorium and the situation is being monitored closely.”
14. BPPL Holdings PLC said that Kalutara District where all its plants are located, is a high risk district zone. So, despite the Government permitting operations of export companies to recommence, the scale of operations has been limited to around 30-40% of full capacity.
“So far, customer orders for our brush and brush filament operations remain strong with just a handful of customers requesting a short delay in shipments. Most customers have been requesting their goods to be shipped out as early as possible which is encouraging.
Our polyester yarn production, however, is negatively impacted by this pandemic as most sportswear brands we serve have had to close down their retail stores in the West. We are still uncertain as to when this situation is likely to improve.”
However, the company says it has adequate funding and unutilized banking facilities to see it through this hibernation period.
15. Expolanka PLC – Given the global reach of our operation the impact of the virus was felt from the onset of the Pandemic in January 2020, however the significant impact to the performance of the business was felt from March 2020.
“Given the nature of our operations and business model, the impact on the core logistic sector is a direct reflection on the impact to our customers. With significantly reduced volumes from our customers coupled with the dynamic environment in securing air and ocean capacity, continued disruption to global supply chains, along with extended credit terms to meet customer requirements, the first half of the financial year 20/21 is likely to remain very challenging.”
16. Commercial Bank of Ceylon PLC said apart from enacting social distancing measure when conducting operations. Additionally, the Bank has deployed mobile banking units in many parts of the country during the lockdownperiod to take services to doorsteps of customers.
Additionally, the Governmentand Central Bank of SriLanka issued severalguidelines and directions in regards to conducting businessoperationand a relief schemeto support the COVID-19 hit borrowers which include moratoriums on loan facilities granted to businesses and individuals and subsidized working capital loans.
The Bank has taken steps to implement such guidelines and directives and is in the process of receiving applicationsfrom borrowers under the said relief scheme.
17. Ceylon Cold Stores PLC – Volumes across the consumer foods business of beverage and frozen confectionery markets has declined sharply due to the imposition of curfew and restrictions in movement. Manufacturing activities have commenced gradually with priority being the health and safety measures of staff and the manufacturing facilities.
The Group expects volumes to improve with the lifting of the curfew, while the outlook beyond that will depend on the impact on the overall economy and resultant impacts on consumer spend. Supermarket services are classified as an essential service by the Government. However, operations have been largely limited to delivery only, although outlets open when curfew restrictions are eased.
Revenue is negatively impacted in the immediate term as most of our outlets are located in high-risk districts and remain closed to the public although this is expected to change from the 4th of May 2020 given the current announcement by the Government. While outlets will be opened once restrictions are eased, we expect to continuously ramp up our capability in serving our customers through online delivery platforms. Outlets which are open to customers will adhere to the new safety guideline issued by government and health authorities.
18. “The impact of COVID-19 pandemic on our business is unprecedented,” said Jetwing Symphony, which owns a large hotel chain. “Almost all operational revenue streams are ceased and any indication of when we may resume operations are highly contingent on a number of local as well as international developments with regard to the battle against the pandemic,” the firm said.
“Currently, all hotels are operating with zero occupancy except Jetwing Colombo Seven having occupancy of 8% due to long stay guests and few guests have held up due to the travel bans.
“On an external front, we have requested banks for debt moratoriums and working capital loans
as per the Central Bank guidelines, which would give us comfort in managing future cashflows
of the business.
“Likewise, internally we have been in discussion with each of our hotels, where we have
reinforced our commitment to our employees and for that reason we have proposed a
voluntary reduction of basic salary and allowances. These measures have been implemented
on a staggered basis in proportion to total compensation, with the top level being encouraged
to forgo up to 50% of their compensation whilst the lowest level employees are shielded from
any such voluntary deductions. (Colombo/May08/2020)