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Monday November 9th, 2026

Sri Lanka’s Abans retains BBB+ (lka) Fitch rating

ECONOMYNEXT- Fitch Ratings has confirmed Sri Lankan retailer Abans Plc at BBB+ (lka) with a stable outlook, over improving net leverage.

“The affirmation reflects Fitch’s view that Abans will continue to make meaningful progress towards improving its net leverage, defined as lease-adjusted debt net of cash/operating EBITDAR, to around 6.0x by the end of the financial year to 31 March 2019,” Fitch said.

It said that Abans has improved its net leverage over the past 12 months, and if the company deviates from this trend, a negative rating action may be taken.

Fitch said that Abans will see a recovery in profitability because the company will be better able to pass through costs to customers, improve operating efficiencies and reduce capital expenditure and investments.

Abans’ revenue is expected to decline over the next 12-18 months due to the recent fuel price increase, Fitch said.

“We believe the fuel price rise will more than offset the recovery in demand in January-June 2018 stemming from better earnings in the agriculture sector, low personal taxes and stable interest rates.”

The full statement follows:

Fitch Ratings has affirmed Sri Lanka-based retailer Abans PLC’s (Abans) National Long-Term Rating at ‘BBB+(lka)’ with a Stable Outlook. A full list of rating action is at the end of this commentary.

The affirmation reflects Fitch’s view that Abans will continue to make meaningful progress towards improving its net leverage, defined as lease-adjusted debt net of cash/operating EBITDAR, to around 6.0x by the end of the financial year to 31 March 2019 (FY19). We expect this to be supported by a recovery in profitability because the company will be better able to pass through costs to customers, as well as operating efficiencies and moderating capex and investments. Abans’ net leverage improved significantly to 6.8x in the 12 months to end-June 2018 from 7.2x at FYE18 and 7.7x at FYE17. However we may take negative rating action in the next six to 12 months if Abans deviates from its deleveraging trend.

Abans’ rating also reflects its strong market position in consumer durables retail in Sri Lanka, its extensive brand portfolio supported by a wide distribution network and a well-managed hire-purchase (HP) business, which are partly offset by its investment in a large real estate project. However the risks stemming from the non-core investment has substantially reduced over the past 18 months because the project is near completion, which has reduced pressure on Abans for additional funding.

KEY RATING DRIVERS

Leverage to Improve: We expect the pace of Abans’ deleveraging to pick up in FY19 as profitability recovers, dividend inflows from its associate company increase, and efficient use of working capital. We expect Abans to be able to reduce leverage to around 6.0x by FYE19 when it starts realising the full benefits of the cost efficiency measures that are being put in place. Abans has also decided to limit capex to maintenance levels in the medium term and refrain from shareholder returns in the next couple of years, which should help keep leverage at levels commensurate with the rating.

Margin to Widen Modestly: We expect Abans’ EBITDAR margin to expand around 150 bp in the next 18-24 months from the 5.4% trough in FY18, which will be helped by a better cost pass-through and operating efficiencies. Management plans to reduce the store network in the next 12 months, which it expects to result in a net annual cost saving of around LKR200 million. We estimate this will widen margin by 50bp, based on our FY19 revenue projections. Abans cut selling, general and administrative costs as a percentage of sales by almost 200bp in FY18 and will target further cuts by eliminating redundancies and integrating processes over the medium term.

The company’s EBITDAR margin expanded 100bp yoy in 1Q19. However these improvements will be partly offset by continued pressure from currency depreciation on 85%-90% of Abans’ cost of goods sold, which the company may not be able to fully pass on to customers. Consequently we do not expect Abans’ margins to recover to the high-single digit range of the past but expect it at around 7% in the medium term, which is essential to maintain net leverage at a level commensurate with the rating.

Demand to Remain Sluggish: Fitch expects Abans’ revenue growth to slow in the next 12-18 months as the recent increase in fuel prices by more than 25% will reduce the discretionary income of consumers, which will reduce demand for consumer durables. We believe the fuel price rise will more than offset the recovery in demand in January-June 2018 stemming from better earnings in the agriculture sector, low personal taxes and stable interest rates. Revenue growth will also be muted by the company’s price increases in the past couple of months and changes to the HP sales mix to improve cost pass-through. Abans’ consumer durables retail revenue fell 7% yoy in 1Q19.

Turnaround in Abans Engineering: We expect Abans Engineering, which is involved in the installation and maintenance of mechanical, ventilation and air conditioning systems, to recover in FY19 after the new management revised its pricing strategy to guarantee a minimum margin from projects and transferred currency risk to the customer, which was previously borne by the company. Abans Engineering is the market leader and has strong growth potential due to the new buildings coming up. The company had an order book of LKR 2.9 billion at FYE18 (1.8x of FY18 revenues), providing strong revenue visibility. We expect the business to contribute around 5% to Abans’ EBIT once it reaches a steady state compared with operating losses of LKR200 million in FY18.

No Further Cash for Property: The Colombo City Center (CCC) project which is a joint venture with a Singaporean partner will not upstream any dividend to Abans until the project loan is fully paid down in 2025. However, the business risk from the project has subsided because the project is due to be completed by mid-2019. Proceeds from pre-sales have been better than expected, and 85% of its retail space has been pre-leased. Management expects CCC to open by end-August, which should help with sales of the remaining inventory. Around 70% of the apartments were sold by end-July 2018.

Abans is not likely to need to provide further cash, if the project encounters any temporary cash flow deficits, because the company’s shareholders will seek funding from other sources. Therefore we do not expect Abans to inject the remaining LKR300 million of its initial capital commitment.

DERIVATION SUMMARY

Abans is the number two player in terms of revenue in consumer durables retail in Sri Lanka, with a strong portfolio of well-known brands and an extensive distribution network. Abans is rated one notch below its closest peer, Singer Sri Lanka PLC (A-(lka)/Stable), the market leader, to reflect its weaker financial profile and thinner EBITDAR margins.

Abans is rated at the same level as DSI Samson Group (Private) Limited (BBB+(lka)/Stable) because Abans’ weaker financial risk profile offsets its stronger business risk profile compared with DSI. DSI is the market leader in locally manufactured footwear, but faces a number of structural challenges, including increasing competition from cheap imports and reducing pricing power. At the same time, DSI’s local tyre business is under pressure due to the lower sales of two-wheelers and three-wheelers following an increase in taxes.

KEY ASSUMPTIONS

Fitch’s Key Assumptions within Our Rating Case for the Issuer

– Revenue growth to slow in FY19 and recover to high-single digits from FY20

– EBITDAR margins to recover and stabilise at around 7% in the medium term

– Capex to fall to around LKR150 million a year in the medium term, mainly for maintenance and store upgrades

– Dividend income from associates to amount to LKR650 million in FY19, and LKR250 million in FY20

– Dividend pay-out to be maintained at 15% of net profit in the medium term

RATING SENSITIVITIES

Developments that May, Individually or Collectively, Lead to Negative Rating Action

– Any deviation in Abans’ current deleveraging trend in the next six to 12 months that prevents the company from improving its adjusted net debt/operating EBITDAR to around 6.0x and fixed-charge coverage (ratio of EBITDAR to gross interest + rent excluding Abans Finance) to 1.3x (FYE18: 1.2x) by FYE19.

Developments that May, Individually or Collectively, Lead to Positive Rating Action

– A sustained improvement in Abans’ adjusted net debt/operating EBITDAR to less than 5.0x and its fixed-charge coverage to more than 1.5x.

LIQUIDITY

Manageable Liquidity Position: As of end-March 2018, Abans had LKR600 million of unrestricted cash and LKR7.5 billion of unutilised but committed credit lines to meet LKR9.3 billion of debt maturing in the next 12 months. However we expect the company to generate around LKR800 million in free cash flow in FY19, which should help bridge the shortfall. In addition, LKR6.6 billion of these maturities are short-term working capital lines and are backed by net working capital of LKR16 billion. As such, we expect banks to roll over these facilities as they fall due in the normal course of business.
 

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Sri Lanka’s flash floods in capital point to systemic institutional failure, ignored directives

ECONOMYNEXT – As torrential monsoon downpours transformed Sri Lanka’s commercial capital’s thoroughfares into raging brown rivers on Friday (06) submerging vehicles, paralyzing public transit, and inundating critical facilities like the National Hospital, the crisis was framed by authorities as an act of nature.

But for the millions of residents wading through waist-deep water, the disaster was not merely meteorological. It was man-made, preventable, and a glaring testament to gross institutional negligence.

Vraîe Cally Balthazaar, the Mayor of the island nation’s biggest local governing body Colombo Municipal Council (CMC) posted on her FaceBook (Meta) platform just a week ago before the floods that people in her ward “have had to live with the risk of flooding for years” after the stormwater drain running through the Jawatta Public Cemetery collapsed in 2019.

She said in the post that she promised the residents that the CMC would get the repairs done before the end of September, and she was happy to say that the CMC has “managed to complete the work by September 15.

“And sometimes, something as simple as fixing a drain can make a real difference to an entire neighbourhood,” Balthazaar said.

However, the flash floods saw the same area heavily flooded despite the ‘fixing’ by the CMC.

Just 24 days before the floods, Prime Minister Harini Amarasuriya herself issued a direct, unequivocal order to government officials and municipal authorities to treat the cleaning of Colombo’s canal and drainage systems as an exceptional priority.

She directed to expedite the work and complete it within two weeks to ensure proper rainwater management amid anticipated increases in rainfall.

Prime Minister Amarasuriya issued these directives while addressing the Colombo District Coordinating Committee meeting held on October 13 at the Narahenpita District Secretariat.

During the meeting, officials from divisional secretariat offices, the Agrarian Development Department, and the Provincial Irrigation Department highlighted existing challenges in cleaning drainage and canal systems, noting issues such as a shortage of technical officers and difficulties faced in formulating plans and estimates.

Her instruction came in response to early meteorological indicators pointing toward an intensifying inter-monsoonal rainfall season.

But the floods last week proved that these directives had been ignored, delayed, and left unimplemented by the very bodies sworn to protect the city’s populace.

Recognizing the chronic vulnerability of the commercial capital’s low-lying geography, the Prime Minister instructed relevant stakeholders to systematically clear Colombo’s primary canals, secondary outlets, and subterranean drainage systems.

Crucially, the directive came with a strict deadline: a two-week window to complete the comprehensive clearing of blockages, silt, and solid waste that choke the city’s waterways.

Colombo would not have had last week’s floods, had the Prime Minister’s instruction been heeded and executed.

But the Prime Minister’s instruction designed precisely to preempt the catastrophic urban flooding that has chronically plagued Colombo during heavy weather was ignored.

Yet, when the skies opened up last Friday (06), the two-week deadline had long expired into the ether of bureaucratic inaction.

The canals remained congested with plastic debris, unauthorized construction bottlenecks, and thick layers of silt.

The drainage systems, starved of maintenance, failed instantly.

Neither the central government machinery nor the Colombo Municipal Council (CMC) can wash their hands of accountability.

The ‘Clean Sri Lanka’ programme under the current government has been created to deal with prevention of flooding among many other ambitious goals.

“The responsibility for this damage must be borne by the President even more than the Mayor,” former Urban Development and Megapolis Minister Champika Ranawaka, a strong government critic, said on his YouTube platform.

“He is the head of the disaster management apparatus, and ‘Clean Sri Lanka’ operates under his direct leadership. Because of his actions and their administrative conduct, the entire state machinery has been brought to a standstill.”

Anatomy of Municipal Paralysis

When orders from the higher office like Prime Minister of the state can be casually sidelined by municipal inertia, it exposes a profound fracture in governance, one where public safety is compromised by institutional paralysis.

At the heart of Colombo’s drainage crisis is a systemic failure of local governance and inter-agency coordination.

The Colombo Municipal Council, tasked with the day-to-day stewardship of municipal infrastructure, waste management, and local drainage networks, has long operated in an administrative comfort zone characterized by reactive posturing rather than proactive mitigation.

When the Prime Minister’s directive was issued in mid-October, it should have triggered an immediate emergency mobilization.

Municipal work crews, heavy machinery, and desilting operations ought to have been deployed across every vulnerable ward, from the commercial hubs of Fort and Pettah to densely populated residential quarters like Borella, Wellawatte, and Grandpass.

Instead, citizens witnessed what can only be described as administrative inertia.

Bureaucratic red tape, sluggish procurement of maintenance contracts, and a lack of accountability mechanisms meant that instructions from the Prime Minister trickled down into endless committee meetings rather than field operations.

By treating a critical pre-monsoon cleanup as a routine administrative task rather than an urgent, life-saving imperative, municipal officials displayed a reckless disregard for urban risk management.

The government repeatedly said it has collected ample tax revenue to run the country. But that money could not be used urgently to protect the Colombo city when it was evident what was going to happen as per Prime Minister Amarasuriya’s instructions.

Furthermore, the failure extends beyond mere delayed cleanups to encompass chronic structural enforcement failures.

Over decades, Colombo’s natural hydrological buffers including its wetlands, marshes, and secondary flood retention areas have been systematically degraded or encroached upon by uncoordinated commercial and residential developments.

When drainage systems are clogged with garbage while vital retention pathways are blocked by concrete, even a standard heavy downpour is bound to trigger catastrophe.

Friday’s deluge merely exposed the cumulative cost of this willful administrative blindness.

Economic Toll of Negligence

The consequences of this systemic failure were borne immediately by ordinary citizens and critical public infrastructure.

The inundation of the National Hospital of Sri Lanka, where floodwaters unprecedentedly breached critical service areas, should be considered a national scandal.

That a premier healthcare institution can be crippled within 2 hours of heavy rain, jeopardizing patient care and compromising sterile environments, illustrates the deadly stakes of municipal failure.

Beyond the hospitals, small business owners watched their livelihoods float away, commuters were stranded for hours in gridlocked, submerged buses, and low-income families residing in underserved settlements suffered extensive property damage.

For an urban economy trying to anchor Sri Lanka’s fragile post-crisis recovery, recurring paralyzing floods exact a heavy toll in lost productivity, infrastructure damage, and emergency response costs.

Accountability

The CMC and government have pointed fingers at the illegal structures erected under past governments for the latest disaster. But this government has already been in power for two years.

In the aftermath of the disaster, routine finger-pointing between central agencies and municipal bodies also has begun, with officials attempting to deflect blame onto unprecedented rainfall volumes.

But meteorological data offers no refuge for negligent administrators.

The rainfall, while heavy, was seasonally anticipated; indeed, it was precisely why the Prime Minister issued her October directive.

When a directive issued by the second-in-command of the country is left gathering dust on a municipal desk while citizens face preventable devastation, the social contract breaks down.

The current government and the Colombo Municipal Council cannot hide behind excuses of resource constraints or administrative oversight.

Preventing flash floods requires more than issuing seasonal press releases or convening post-disaster committees after the water has receded.

It demands rigorous enforcement, transparent institutional accountability, and a zero-tolerance approach to administrative lethargy.

If the authorities cannot execute basic drainage maintenance, Colombo will remain structurally vulnerable, hostage to the next raincloud, and failed by the very institutions meant to protect it. (Colombo/November 08/2026)

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Sri Lanka rupee closes at 332.53/59 to US dollar spot, bond yields edge up

ECONOMYNEXT – Sri Lanka’s rupee closed at 332.53/59 to the US dollar spot on Monday, from 332.55/60 the previous day, while bond yields closed higher, dealers said.

A bond maturing on 15.09.2029 closed at 190/98 percent, up from 10.85/95 percent.

A bond maturing on 01.08.2030 closed at 11.07/12 percent, up from 11.05/10 percent.

A bond maturing on 01.02.2031 closed at 11.30/40 percent, up from 11.10/15 percent.

A bond maturing on 15.12.2032 closed at 11.65/70 percent, up from 11.55/65 percent.

A bond maturing on 01.11.2033 closed at 11.95/12.00 percent, up from 11.90/95 percent.

A bond maturing on 15.10.2034 closed at 12.10/15 percent, up from 12.05/12 percent.

A bond maturing on 15.08.2036 closed at 12.40/50 percent, up from 12.30/40 percent. (Colombo/Nov9/2026)

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Sri Lanka stocks close up 1.37-pct, banks lead turnover

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed up on Monday, CSE data showed, with the benchmark All Share Price Index moving up 1.37 percent.

The ASPI was up 291.72 points at 21,531.37, while the more liquid S&P SL20 was up 1.67 percent, or 100.96 points, at 6,146.34.

Positive contributors to the ASPI were Commercial Bank of Ceylon (up 2.86 percent at 216.00 rupees), Hatton National Bank (up 1.52 percent at 399.75 rupees), Asiri Hospital Holdings (up 12.86 percent at 31.60 rupees), Tokyo Cement Company (up 5.22 percent at 84.70 rupees), and Access Engineering (up 3.93 percent at 81.90 rupees).

Carson Cumberbatch (down 4.24 percent at 712.00 rupees), Richard Pieris and Company (down 2.43 percent at 28.10 rupees), LOLC Holdings (down 0.62 percent at 400.00 rupees), Renuka Holdings (down 2.63 percent at 37.00 rupees), and Chevron Lubricants Lanka (down 0.61 percent at 204.25 rupees) were top negative contributors.

Market turnover was 3.33 billion rupees. The S&P/CSE Banks Industry Group led turnover with 667.76 million rupees.

The session saw heavy crossings, according to Raynal Wickremeratne, Head of Research and Strategy at NDB Securities. Significant crossings included Keells (23 million rupees), Distilleries Company (27.7 million rupees), Sunshine Holdings (30.6 million rupees), Commercial Bank (32.4 million rupees), Ceylon Tobacco Company (35.6 million rupees), Hatton National Bank (39.5 million rupees), Prime Lands (40.5 million rupees), and HAS Holdings (41.5 million rupees).

In corporate news, Hayleys Retail Holdings Ltd announced it has partnered with supply chain software provider Blue Yonder to build and scale an AI-native grocery supermarket chain across Sri Lanka. (Colombo/Nov09/2026)

 

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Sri Lanka’s Hayleys Retail to launch supermarket chain with Blue Yonder

ECONOMYNEXT — Hayleys Retail Holdings Ltd has selected supply chain software provider Blue Yonder to build its grocery retail operations from the ground up, the two companies said in a joint statement.

Hayleys Retail, a member of Sri Lanka’s diversified conglomerate Hayleys Group, plans to open several stores in the near future to serve consumers across the country. The agreement marks Blue Yonder’s first retail customer in Sri Lanka.

“Our entry into supermarket retail is about bringing that same commitment to quality and reliability closer to everyday Sri Lankan consumers,” Mohan Pandithage, Chairman and Chief Executive of Hayleys PLC said.

“With Blue Yonder, our teams will have AI-driven insight to deliver a seamless, consistent shopping experience across every store,” he said.

Hayleys, which accounts for approximately 5 percent of Sri Lanka’s export income and operates across 17 business sectors, is entering the large-scale supermarket space by drawing on its group strengths in manufacturing, logistics, and services.

The company selected Blue Yonder to connect its data across merchandising and shelf space, deploy artificial intelligence agents to catch operational issues early, and scale its business into a national network without changing platforms.

The rollout will begin with merchandise operations to manage suppliers, items, costs, and pricing, followed by machine learning capabilities to forecast demand and balance store inventory during seasonal peaks.

“Hayleys Retail is choosing one where AI is the foundation rather than an add-on—connected data and agentic AI built into core merchandising operations, and planning that learns as the business grows,” Antonio Boccalandro, President, APAC at Blue Yonder said.

The retailer plans to use the platform to automate routine store tasks and adjust inventory according to real-time sales and local market trends as its store footprint grows. (Colombo/Nov09/2026)

 

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Sri Lanka’s Citrus Leisure extends Lotus Tower management pact

ECONOMYNEXT – Sri Lanka listed hospitality firm Citrus Leisure said it has extended an agreement to manage consumer-facing and entertainment spaces at the Colombo Lotus Tower, which includes revolving restaurant Blue Orbit, until June next year.

The initial agreement signed between Citrus Leisure and Colombo Lotus Tower Management Company (Private) Limited (CLTMC) is due to expire on December 11.

“The Board of Directors of CLTMC at meeting held on 2nd November 2026 has resolved to extend the term of the Management Agreement and continue the existing Management Agreement until 30th June 2027, to which the company has given its concurrence,” the company said in a market filing.

Citrus Leisure Plc opened its revolving restaurant at the Lotus Tower in December 2023.

The company signed a 3-year agreement with CLTMC in May 2023 to provide services in the management of (l) the banquet hall 1 on the 25th floor, (2) the banquet hall 2 on the 26th floor, (3) the revolving restaurant on the 27th floor, (4) the 6 suites situated on the 28th floor and the kitchen in the basement floor of the Colombo Lotus Tower.

The 350-meter or 1,150-feet tower, the tallest in South Asia, was built at a cost 104.3 million US dollars with 80 percent of the money borrowed from Exim Bank of China.

Located in the commercial heart of Colombo, the tower has been called a symbolic landmark of Sri Lanka as well as a colossal white elephant and has been mired in controversy for years. (Colombo/Nov9/2026)

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CIC Holdings Sept quarter net profit rises 20-pct to Rs1.7bn

ECONOMYNEXT — Sri Lanka conglomerate CIC Holdings recorded a net profit of 1.66 billion rupees for the quarter ended September 30, rising 20.3 percent from 1.38 billion rupees in the same quarter last year, interim accounts showed.

The group posted basic earnings per share of 0.87 rupees for the September quarter, up from 0.73 rupees a year earlier.

Quarterly revenue grew 3.4 percent to 20.89 billion rupees from 20.20 billion rupees, supported by broad-based growth across industrial solutions, livestock, and healthcare segments, which counterbalanced relative demand moderation in agricultural inputs.

Cost of sales rose 5.3 percent to 15.20 billion rupees, outpacing revenue growth and causing gross profit to contract marginally by 1.2 percent to 5.68 billion rupees.

Results from operating activities dropped 7.3 percent to 2.66 billion rupees from 2.87 billion rupees, impacted by higher operating overheads.

Selling expenses expanded 6.8 percent to 2.15 billion rupees, and general and administrative expenses climbed 5.8 percent to 1.07 billion rupees, while other operating income dropped 29.6 percent to 117.40 million rupees.

However, operating profits were cushioned by an impairment reversal on trade receivables of 85.83 million rupees, turning around from an impairment provision of 23.38 million rupees in the corresponding quarter last year.

Net finance costs climbed 35.4 percent to 712.25 million rupees from 526.01 million rupees.

The increase was driven by a 30.8 percent rise in finance expenses to 771.46 million rupees, primarily reflecting higher interest expenses on loans to finance elevated working capital and inventory requirements.

The quarter’s bottom line was strongly bolstered by CIC’s equity-accounted investment in John Keells Holdings PLC (JKH).

Share of profit from equity-accounted investees surged more than fourfold to 590.50 million rupees from 257.87 million rupees, driven by JKH’s strong profit expansion during the period.

The group also recognized a gain on bargain purchase of 55.59 million rupees during the quarter resulting from additional share purchases in JKH where the proportionate net asset value exceeded acquisition cost, compared to no such gain a year earlier.

With associate income gains offsetting operating margin contraction and higher borrowing costs, group pre-tax profit held virtually flat at 2.59 billion rupees, down 0.11 percent.

Income tax expense fell 29.4 percent to 606.24 million rupees from 858.71 million rupees, driving total group profit for the period up 14.1 percent to 1.98 billion rupees.

Total group assets stood at 108.58 billion rupees as of September 30, up from 99.75 billion rupees at the end of March 2026.

Group net asset value per share increased to 25.52 rupees from 22.10 rupees a year earlier.

CIC Holdings’ ordinary voting shares closed at 27.80 rupees at the end of September.(Colombo/Nov09/2026)

 

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