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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Bracing for tough economic climate, JKH 1Q profits up 34%

Bracing for tough economic climate, JKH 1Q profits up 34%

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CSE.SAS

CSE.SAS
Global Moderator
John Keells Holdings PLC posted a 34 percent increase in net profits for the first quarter of the 2012/13 financial year as the diversified blue-chip braces itself for tough times ahead.

Profit before tax amounted to Rs. 2.40 billion, an increase of 42 percent from Rs. 1.68 billion a year ago, while the profit attributable to equity holders for the quarter amounted to Rs. 1.66 billion, up 34 percent from Rs. 1.24 billion the previous year, the company said releasing interim financial results yesterday.

The revenue at Rs. 20.01 billion in the first quarter of the financial year 2012/13 was 26 percent above the Rs. 15.88 billion recorded in the corresponding period in the previous year. The Company PBT of Rs. 2.24 billion for the quarter was significantly above the Rs. 1.02 billion recorded a year earlier.

"Although the performance of the Group in the first quarter is encouraging, its sustenance in the immediate future will be challenging as the increased input costs emanating mainly from the impact of the depreciation of the Rupee, higher duties and tariffs on imported items and the increase in fuel and electricity tariffs begin to take effect. A variety of steps, and measures, have been taken to mitigate these impacts," JKH Chairman Susantha Ratnayake said.

"The Leisure industry group PBT of Rs. 648 million was an increase of 73 percent over the first quarter of 2011/12 [2011/12 Q1: Rs. 374 million]. The enhanced PBT of the Leisure group was primarily driven by the performance of the City Hotels and Maldivian Resorts sectors. The performance of the City Hotels sector was strong with both Cinnamon Grand and Cinnamon Lakeside witnessing continued growth. The occupancies of Sri Lankan Resorts were below expectations. However, this fall was compensated to a certain extent by higher average room rates. We continue to reiterate the need for a concerted marketing campaign to create greater awareness of the destination to support the medium to long term sustainability of the industry. In the Maldivian Resorts, higher occupancies coupled with cost saving initiatives resulted in improved results," Ratnayake said.

"The Property industry group PBT of Rs. 65 million was 24 per cent below that recorded in the first quarter of 2011/12 [2011/12 Q1: Rs. 85 million]. The "OnThree20" project is on schedule with over 30 per cent of the construction completed as at 30th June 2012. Construction of a mall in Kapuwatta, Ja-Ela commenced in June 2012 and it is expected to be completed, and ready for occupation, by December 2012.

"The Consumer Foods and Retail industry group PBT of Rs. 393 million was an increase of 92 per cent over the first quarter of 2011/12 [2011/12 Q1: Rs. 204 million]. While the ice cream business recorded a growth in volumes compared to the corresponding period last year, the carbonated soft drinks business volumes were maintained in a market which showed little or no real growth. The processed meats business is close to finalising the acquisition of the production facility of D&W Foods Limited. Keells Food Products PLC has announced a 2 for 1 rights issue at Rs. 60/- per share, with the intention of raising Rs. 1.02 billion which will be used for the D&W acquisition and in financing the increased working capital. During the quarter under review, the Retail business was profitable compared with a loss in the corresponding period last year, primarily as a result of higher footfalls. .

The Financial Services industry group PBT of Rs. 257 million was a marginal increase of 5 per cent over the first quarter of 2011/12 [2011/12 Q1: Rs. 245 million]. During the quarter, Nations Trust Bank achieved strong profit growth and continued to be the primary contributor to the Financial Services industry group. The PBT of the Insurance business saw steady growth during the quarter under review. The Stock Brokering business was significantly impacted as a result of the lower level of activity which prevailed at the Colombo Stock Exchange.

"The Information Technology Services industry group consolidated its position by achieving a PBT of Rs. 6 million over the first quarter of 2011/12 following two consecutive years of losses [2011/12 Q1: loss of Rs. 20 million]. The Office Automation business (JKOA) remained as the major contributor to the IT industry group profits, although profits did see a decline as compared to the corresponding period in the previous year. Sales were adversely affected due to the increased product cost. The Business Process

Outsourcing business in India expanded its volumes through the acquisition of new customers and as a result achieved higher revenues as compared to the corresponding period of the previous year.

"Other, comprising of Plantation Services, John Keells Capital and the Corporate Centre, recorded a profit of Rs. 72 million for the quarter ended 30 June 2012 [2011/12 Q1: Rs. 78 million] The contribution from the Plantation Services business improved on account of higher average sales price for tea."
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=57727

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

Surviving and even improving YoY when times are tough is the hall mark of a blue chip. Now let not talk QoQ as that is a different matter.

sriranga

sriranga
Co-Admin
1Q pre-tax profit up 42% to Rs. 2.4 b; bottom line higher by 34% to Rs. 1.6 b; revenue improves by 26% to Rs. 20 b

Premier blue chip John Keells Holdings (JKH) has made a good start in the new financial year 2012/13 with turnover and profits up but its Chairman Susantha Ratnayake has cautioned challenging times are ahead.

JKH Group’s profit before tax at Rs. 2.40 billion in first quarter ended on 30 June 2012 was an increase of 42% above the Rs. 1.68 billion in the corresponding period in the previous year, while the profit attributable to equity holders for the quarter at Rs. 1.66 billion reflects an increase of 34% over the Rs. 1.24 billion in the same period in the previous year.

The revenue at Rs. 20.01 billion in the first quarter of the financial year 2012/13 was 26% above the Rs. 15.88 billion recorded in the corresponding period in the previous year.

The Company PBT of Rs. 2.24 billion for the quarter was significantly above the Rs. 1.02 billion recorded in the corresponding period in the previous year.

“Although the performance of the Group in the first quarter is encouraging, its sustenance in the immediate future will be challenging as the increased input costs emanating mainly from the impact of the depreciation of the rupee, higher duties and tariffs on imported items and the increase in fuel and electricity tariffs begin to take effect. A variety of steps, and measures, have been taken to mitigate these impacts,” JKH Chief
Ratnayake said in his review accompanying interim results.

The financial statements for the quarter ended 30 June 2012 have been prepared and presented in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) which have materially converged with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

This interim report is JKH’s first published under the new IFRS guidelines and the previous year’s financials have been restated for comparative purposes. The report also covers the key policy changes as required for first time adoption. The effect of the transition from SLASs to SLFRSs has also been presented in the reconciliation statements and accompanying notes to the reconciliation.

Following are excerpts from JKH Chairman Ratnayake’s review accompanying the interim results:

Transportation: The Transportation industry group PBT of Rs. 957 million was an increase of 33% over the first quarter of the financial year 2011/12 [2011/12 Q1: Rs. 718 million]. The increase in profitability was primarily driven by the bunkering business. The Group signed a share sale agreement with ‘Norbert Dentressangle S.A’ to divest a share of its freight forwarding businesses in India and Sri Lanka as a part of the continuous portfolio review of the Group. In May 2012, South Asia Gateway Terminals installed and commissioned two new ‘Ship to Shore’ cranes.

Leisure: The Leisure industry group PBT of Rs. 648 million was an increase of 73% over the first quarter of 2011/12 [2011/12 Q1: Rs. 374 million]. The enhanced PBT of the Leisure group was primarily driven by the performance of the City Hotels and Maldivian Resorts sectors. The performance of the City Hotels sector was strong with both Cinnamon Grand and Cinnamon Lakeside witnessing continued growth. The occupancies of Sri Lankan Resorts were below expectations. However, this fall was compensated to a certain extent by higher average room rates. We continue to reiterate the need for a concerted marketing campaign to create greater awareness of the destination to support the medium to long term sustainability of the industry. In the Maldivian Resorts, higher occupancies coupled with cost saving initiatives resulted in improved results.

Property: The Property industry group PBT of Rs. 65 million was 24% below that recorded in the first quarter of 2011/12 [2011/12 Q1: Rs. 85 million]. The “OnThree20” project is on schedule with over 30% of the construction completed as at 30th June 2012. Construction of a mall in Kapuwatta, Ja-Ela commenced in June 2012 and it is expected to be completed, and ready for occupation, by December 2012.

Consumer Foods and Retail: The Consumer Foods and Retail industry group PBT of Rs. 393 million was an increase of 92% over the first quarter of 2011/12 [2011/12 Q1: Rs. 204 million]. While the ice cream business recorded a growth in volumes compared to the corresponding period last year, the carbonated soft drinks business volumes were maintained in a market which showed little or no real growth. The processed meats business is close to finalising the acquisition of the production facility of D&W Foods Limited. Keells Food Products PLC has announced a 2 for 1 rights issue at Rs. 60 per share, with the intention of raising Rs. 1.02 billion which will be used for the D&W acquisition and in financing the increased working capital. During the quarter under review, the Retail business was profitable compared with a loss in the corresponding period last year, primarily as a result of higher footfalls.

Financial Services: The Financial Services industry group PBT of Rs. 257 million was a marginal increase of 5% over the first quarter of 2011/12 [2011/12 Q1: Rs. 245 million]. During the quarter, Nations Trust Bank achieved strong profit growth and continued to be the primary contributor to the Financial Services industry group. The PBT of the Insurance business saw steady growth during the quarter under review. The Stock Brokering business was significantly impacted as a result of the lower level of activity which prevailed at the Colombo Stock Exchange.

Information Technology: The Information Technology Services industry group consolidated its position by achieving a PBT of Rs. 6 million over the first quarter of 2011/12 following two consecutive years of losses [2011/12 Q1: loss of Rs. 20 million]. The Office Automation business (JKOA) remained as the major contributor to the IT industry group profits, although profits did see a decline as compared to the corresponding period in the previous year. Sales were adversely affected due to the increased product cost. The Business Process Outsourcing business in India expanded its volumes through the acquisition of new customers and as a result achieved higher revenues as compared to the corresponding period of the previous year.

Other including Plantation Services: Other, comprising of Plantation Services, John Keells Capital and the Corporate Centre, recorded a profit of Rs. 72 million for the quarter ended 30 June 2012 [2011/12 Q1: Rs. 78 million] The contribution from the Plantation Services business improved on account of higher average sales price for tea.

In keeping with our triple bottom line approach, the Group has continued to integrate sustainability development in its pursuance of strategic and financial goals. The Group’s robust, internal quarterly sustainability reporting framework has enabled tracking of sustainability performance against key performance indicators and global benchmarks.

The Group continues to measure and track its sustainability performance on a quarterly basis covering vital aspects such as the carbon footprint, water usage, waste management and employee health and safety.

The Group’s carbon footprint for the first quarter amounted to 19,303 MT as against 17,967 MT in the previous year which translated into 0.96 MT per one million rupees of revenue as against 1.13 MT in the corresponding period in the previous year, reflecting a reduction of 15%.

The Group’s water usage amounted to 407,893 cubic meters in the first quarter as against 465,035 cubic meters in the corresponding period of the previous year, with the total waste generated amounting to 1,533 MT as against 1,951 MT in the previous year.

While the Group continues to benefit from innovative initiatives such as renewable energy lighting, co-generation, utilisation of waste heat of generators which were introduced in the previous financial year, the Group also launched a Group-wide e-waste management initiative this quarter to better manage the disposal of e-waste.

The Group continued with its environmental conservation and community development projects such as recycling of plastic containers and rainwater harvesting, amongst others. I am pleased to state that a majority of these initiatives are spear-headed and developed by the people at JKH, further reaffirming the entrenchment of a culture of sustainable development across the Group.
http://www.ft.lk/2012/07/27/good-start-by-jkh-in-challenging-fy13/

http://sharemarket-srilanka.blogspot.co.uk/

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