“The growth in PBT was predominantly driven by City Hotels. Sri Lankan Resorts were impacted by lower than expected occupancies as a result of a drop in our traditional markets, combined with aggressive marketing by competing destinations.”
“We continue to reiterate the importance and urgency of creating greater awareness of Sri Lanka as a travel destination, to ensure that the country fully realizes the substantial multiplier effects to the economy from this important industry,” Chairman, JKH, Susantha Ratnayake said.
Meanwhile, profitability in the group’s Consumer Foods & Retail segment recorded significant decreases, in large part due to the lack of 2011’s nonrecurrent income of Rs. 120 million however other factors, including a hike in excise and duty increases last year were also cited as impacting the segment’s bottom line.
“Ice cream, soft drink and processed meat volumes were below expectations while overall profitability was negatively impacted by excise and duty increases and other cost escalations during the quarter under review. This was compounded by the severe floods experienced in many districts.”
“The imposition of the value added tax (VAT) of 12 per cent with effect from 1st January 2013 on retail businesses with turnover exceeding Rs. 500 million per quarter is expected to have an impact on the margins of the retail sector,” Ratnayake noted.
Commenting further on the new tax regime, Ratnayake expressed disappointment at the lack of notice given to retailers in order to prepare for the new VAT rates.
“Whilst we support the principle of broadening the tax base, the fact that no transitional provisions were made available to allow for the claim of input VAT on the closing stocks as at 31st December 2012 was disappointing. This will result in a significant ‘one-off’ impact on profitability in the next quarter,” he stated.
The group’s Transportation segment posted a profit before tax of Rs. 844 million, in line with 2011’s Rs. 845 million profit before tax, mainly on account of exchange losses in the bunkering business which was caused in turn by the appreciation of the Rupee.
In other developments, in the transport segment, Ratnayake stated that the group’s new domestic aviation associate, ‘Cinnamon Air’ had just completed the purchase of two Cessna amphibian aircraft, with operations set to commence during the 4th quarter of the financial year 2012/13.
The group posted a profit of Rs. 2.90 million during the third quarter of 2012, against Rs. 2.67 million in the previous year, up by 8 percent YearOn-Year. Group turnover during the quarter was recorded at Rs. 21.5 million, up from Rs. 21.4 million in 2011.
Earnings per share during the quarter stood at Rs. 3.40 as against Rs. 3.18 in 2011.