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.”
(COLOMBO 24 May 2019)