fallen after the reversal of some import tax cuts that caused a profit
surge, although vehicle demand remains strong with rising incomes and
economic growth, a report said.
Motor sector companies reported the highest growth in net profit for the last couple
of quarters after the government slashed import duties last year, Lanka
Securities said in a report on corporate earnings for the January -
March 2011 quarter.
Net profit growth in the sector was 132.5 percent in the quarter from a
year ago owing to the tax cuts but profits were down compared with the
"The sector demonstrated a monstrous growth in profitability - by 132.5
percent year-on-year to 1,119.8 million rupees - which can be
attributable to the overwhelming demand for vehicles hyped by the
reduction in vehicle imports duties," it said.
Nevertheless, the sector saw a 13.4 percent quarter-on-quarter drop in
earnings - a sign of the fading effects of the tax revision, the report
said, referring to the re-imposition of some import duties by the
"Hence, we are not anticipating abnormal profit growth in the
forthcoming periods that was seen in the last quarter," Lanka Securities
"But with the prevailing economic conditions in the country and growing
demand along with per capita income we anticipate sustainable growth in
the companies in the sector."