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04 November, 2015 11:57 AM Source: Financial Times - Sri Lanka
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Premier blue chip John Keells Holdings PLC (JKH) yesterday reported a strong second quarter with its consolidated pre-tax profit rising by 27% to Rs. 4.64 billion.
Resilient performance in the second quarter pushed the cumulative FY16 first half pre-tax profit by 17% to Rs. 7.83 billion. Last year’s comparative figure of Rs. 6.67 billion included a capital gain of Rs.389 million.1
Star performer in 2Q was JKH’s Consumer Foods and Retail industry group which saw its pre-tax profit swell by 109% to Rs. 1.04 billion. Transportation sector also saw a 53% rise in pre-tax profit to Rs. 844 million. Other sectors including Leisure, Property and Financial Services suffered dip in pre-tax profit.
The profit attributable to equity holders for the second quarter at Rs.3.47 billion reflects an increase of 31% over the previous year, while the first half performance at Rs.5.65 billion reflects an increase of 18% over the corresponding period of the previous financial year.
Group revenue at Rs. 22.68 billion for the second quarter was a 5% increase and for the first half it rose by 3% to Rs. 43.68 billion.
At Company level, PBT for the second quarter of 2015/16 at Rs. 4.93 billion is an increase of 350% over the Rs. 1.09 billion recorded in the corresponding period of 2014/15, primarily due to the capital gain of Rs.3.10 billion arising from the share repurchase of Union Assurance PLC where the Company subscribed to its entitlement. However, the capital gain is eliminated at the Group reporting level. The Company PBT for the first half of the financial year at Rs. 8.17 billion was an increase of 101% over the previous financial year.

Following is brief review by JKH Chairman Susantha Ratnayake regarding the sectoral performance as contained in the interim results statement.
The Transportation industry group PBT of Rs.844 million in the second quarter of 2015/16 is an increase of 53% over the second quarter of the previous financial year (2014/15 Q2: Rs. 553 million). The improved performance is attributable to the Group’s Ports and Bunkering businesses. The Bunkering business witnessed an improvement in volumes on the back of an increased demand for supplies over Colombo and maintained its market leadership position. Enhanced operational efficiencies and reduced overheads, contributed positively towards the performance of South Asia Gateway Terminals (SAGT).
The Leisure industry group PBT of Rs. 885 million in the second quarter of 2015/16 is a decrease of 23% over the second quarter of the previous financial year (2014/15 Q2: Rs. 1.15 billion). As in the previous quarter, the decline in PBT is mainly on account of the partial closure of Cinnamon Lakeside which negatively impacted overall occupancies and profitability of the City Hotels sector. Cinnamon Red performed well recording an average occupancy of 89% for the period under review. The Sri Lankan Resorts sector continued to benefit from the growth in tourist arrivals into the country and recorded an increase in occupancy. Whilst the depreciation of the Rupee will have a positive impact on the foreign currency denominated revenue streams emanating within Sri Lanka, the Sri Lankan Resorts sector had a negative impact on the translation of its foreign currency denominated debt during the quarter. The tourist arrivals in to the Maldives witnessed only a marginal increase and this coupled with the increased supply of rooms resulted in a significant increase in overall competition. However, improved operational efficiencies and the resulting cost savings helped partially mitigate the impact. The improved performance of the European and Chinese markets contributed towards a notable growth in profitability for the Destination Management business.

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