Last quarter expected to improve full year picture
January 26, 2013, 6:20 pm
Keells Hotels PLC, the resort hotel owning company of the JKH group, has seen a sharp decline in profitability in the first nine months of the current financial year although results in the last quarter are expected to improve the picture for the whole year ended March 31, 2013.
Very high finance costs are partly responsible for the depressed bottom line, analysts said.
The company’s results for the December quarter released to the Colombo Stock Exchange last week saw the net profit down 22% from a year earlier to Rs.222 million largely on account of higher interest cost.
The interim financials revealed that in the nine months to December, Keells Hotels had lost Rs.117 million on its Sri Lanka operations against a profit of Rs.103 million a year earlier although operations in the Maldives where the company is strongly represented caught up some of the lag with a profit of Rs.493 million, up from Rs.305 million a year earlier.
Analysts said that the company had invested heavily in refurbishing existing hotels and building a new hotel, Chaaya Bey in Beruwala, which was recently commissioned.
Other resort properties here including Chaaya Tranz in Hikkaduwa, Chaaya Wild in Yala and Chaaya Blue in Trincomalee had been fully refurbished in recent months and years adding to the company’s finance cost which in the first nine months of this year had grown 168% to Rs.165 million.
Earnings per share for the December quarter was 15 cents and for the nine months to December 26 cents on total profits of Rs.377 million.
Over the first nine months of this year Keells Hotels had spent Rs.1.9 billion in capital expenditure for its refurbishment program.
Results from Chaaya Bey are expected to help boost the company’s full year financials in the last quarter of the year which is normally the best due to the winter season.