Businesses down

198 listed firms report consolidated profit of Rs. 30.2bn, down 17%

198 of the 285 listed entities have published their performance for 1QFY13 to exhibit a 17 percent dip to a cumulative of Rs. 30.2 billion, Softlogic Equity Research (SER) said yesterday (16).

" The depreciating exchange rate environment is said to have had a bad hit on many companies as they eat out earnings in terms of exchange losses, wider outflow to service charge on foreign loans and higher import costs. Exporters would be a direct beneficiary in this exchange rate environment but export oriented entities listed on CSE are minimal and firms’ with overseas operations. Decline in performance in the heavy index such as Bukit Darah and Carsons Cumberbatch have weighed on the market. CSE still continues to be an attractive pick amongst the emerging markets as proved by the recent foreign interest," it said.

SER also went on to say that "increasing interest rates continued to haunt the bourse as it lacks buying power" with all three indices closing in the red yesterday.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=59340

Okay what happens if we add the several billions difference made by BUKI and CARS ?

Will the whole market situation change?

I would first remove all the "exchange losses" to see whether the rest of the profit is really down or not.

Then perhaps remove the one off items including investment losses as well.

If you do what you said and what I said above some people might be dumbfounded with overall this quarter results. But let leave he face value as it is 17% down is it and take care of out own shares.

npp wrote:I would first remove all the "exchange losses" to see whether the rest of the profit is really down or not.

Then perhaps remove the one off items including investment losses as well.

@slstock wrote:Okay what happens if we add the several billions difference made by BUKI and CARS ?

Will the whole market situation change?

1. Not all exchange losses are alike ! when companies operating in Sri-Lanka borrow dollars, they have to repay with rupees converted to dollars at higher amount. Then it is an actual forex loss. The forex losses incurred by Buki/Cars are not actual losses but notional losses only. they have no cash flow impact and are due to translation of their U.S dollar debt to Sri-Lankan rupees. they borrow in U.S Dollars to fund their Indonesian & Malaysian operations in rupiah's and ringitt. it is only when these currencies devalue against the dollar that an actual loss is created. Unlike companies operating in Sri-Lanka, they do not have to depend on Sri-Lankan rupees to settle their U.S. dollar debt.

2. The actual profit Buki / Cars made in the June 2012 quater is much higher than presented due to following factors

A. Forex loss - Rs 455,321,000 - notional loss - add to profit
B. Fair value gain in biological assets - refer page 15 pt 6 of of interim statement = Rs 1,100,955,000
C- Inventory increased by Rs 2 Bill from 31st March quater. In the Palm oil business, the fresh fruit bunches have to be converted to CPO in 24 hours or they spoil. all direct operating costs are expensed as they go. thus what remains in inventory is pure profit. as at a particular date, it can be in inventory or go directly to revenue when sold. all associated costs are already expensed. now the Rs 10 Bill they show in inventory consists of CPO, maybe some FFBB, Oils and Fats and Beer. going by past quater inventory levels, perhaps their is additional Rs 1-2 Billion is CPO stock as at quater ending date which was captured in inventory and which should have flowed to revenue.
When you add all this up, you will get an approximate actual profit for the quater (Rs 3-4 Billion).

3. When you compare with corresponding 1st quater in 2011, approx Rs 3.8 Billion profit were for one off items.
- BUKI/CARS Share swop for malaysian plantation shares - Rs 2.4 Bill Profit
- CINV / GUAR - Selling Aitken Spense shares @ 140 - Rs 1.4 Bill Profit

Thus you have to keep these two factors in mind when you compare Buki / Cars result Q on Q.