Sri Lanka’s John Keells group food business sales, profits slide

ECONOMYNEXT – Sri Lanka’s John Keells Holdings consumer foods business has seen a sharp slide in profits and margins in the December 2017 quarter largely owing to a sugar tax imposed late last year and lower consumer spending.

The group’s consumer foods sector includes the beverage, frozen confectionary and processed foods businesses.

Beverage sales fell 21% in the third quarter of the 2018 financial year while ice cream volumes fell six percent, according to a JKH investor presentation.

JKH says it is market leader in soft drinks, ice creams and processed meats sold under Elephant House and Keells brands.

The pre-tax profit margin in the consumer foods business fell to nine percent in the December 2017 quarter from 14% the year before.

JKH said the sales decline in the beverage business was worsened by the implementation of a sugar tax from November 2017, which resulted in substantial price increases.

The continued tapering of demand arising from subdued consumer discretionary spending was also a factor.
(COLOMBO, February 06, 2018)