JKH forges with solid growth
Premier blue chip John Keells Holdings (JKH) has achieved solid progress in the second quarter with recurring Group pre-tax profit topping the Rs. 2 billion mark, finishing the first half with a Rs. 4 billion haul.
JKH said the recurring Group Profit Before Tax (PBT) of Rs. 2.12 billion for the quarter and Rs. 4 billion for the first six months of the financial year 2011/2012 grew by 28% and 26% respectively compared to Rs. 1.66 billion and Rs. 3.19 billion in the corresponding periods in the previous year, excluding the gains of Rs. 1.79 billion from the sale of stakes in Asian Hotels and Properties PLC (AHPL) and John Keells Hotels PLC (KHL).
Group PBT was Rs. 2.12 billion for the quarter and Rs. 4 billion for the first six months of the financial year 2011/2012, compared to the PBT of Rs. 3.45 billion and Rs. 4.98 billion in the corresponding periods in the previous year. Previous year’s figure included capital gains of Rs. 1.79 billion.
While the recurring profits attributable to equity holders grew by 38% for the quarter and 37% for the first six months, the profits attributable to equity holders for the quarter and first six months of the financial year 2011/2012 were Rs. 1.58 billion and Rs. 2.94 billion respectively as against Rs. 2.93 billion and Rs. 3.94 billion recorded in the corresponding periods in the previous year.
Group revenues of Rs. 17.44 billion and Rs. 33.13 billion in the second quarter and the first half of 2011/2012 were 25% and 23% above the Rs. 13.97 billion and Rs. 26.89 billion recorded in the corresponding periods in the previous year.
Group gross profits of Rs. 3.73 billion and Rs. 6.95 billion in the second quarter and the first half of 2011/2012 were 41% and 33% above the Rs. 2.65 billion and Rs. 5.23 billion recorded in the corresponding periods in the previous year.
The company PBT was Rs. 479 million for the quarter and Rs. 1.50 billion for the first six months of 2011/2012 compared with the PBT of Rs. 2.31 billion and Rs. 3.33 billion in the corresponding periods in the previous year which included the capital gains.
JKH Chairman Susantha Ratnayake in a review accompanying interim results said transportation PBT for the quarter increased by 30% to Rs. 724 million [2010/11 Q2: Rs. 556 million] mainly on the back of increased volumes in selected grades of products in the bunkering business. The cold chain project for agricultural and fisheries products in the north and east of Sri Lanka was jointly commissioned by John Keells Logistics and USAID in the latter part of September 2011.
Leisure recorded a PBT of Rs. 667 million for the quarter compared to a PBT of Rs. 337 million recorded in the same period last year, reflecting a growth of 98%. This growth is despite the continued closure of some hotels for refurbishment and upgrades in the period.
The improvement in performance is primarily attributable to the better results achieved by both the city hotels and the Maldivian resorts. The refurbishment of Cinnamon Lakeside was completed and is operating at full capacity from 1 October. JKH has partnered with Sanken Lanka Limited to build and manage a 240-room business hotel in Colombo, for which construction has commenced.
Chaaya Tranz, Hikkaduwa, which was closed from May 2010 for refurbishment at a cost of Rs. 1.32 billion and Chaaya Wild, Yala, which was closed from May 2011 for refurbishment at a cost of Rs. 441 million are scheduled to reopen in November 2011. The construction of the Rs. 2.63 billion Chaaya Bey, Beruwala, is ahead of schedule and will be the latest addition to the resort portfolio in the second half of 2012.
Property recorded a loss of Rs. 11 million for the quarter, compared to a PBT of Rs. 145 million recorded in the same period last year. The revenue recognition of the Emperor was behind schedule and the full revenue impacts of the completion of the Emperor will be seen in the second half of the current financial year. The construction and sales of the Rs. 9 billion ‘OnThree20’ project are progressing as planned.
Consumer Foods and Retail PBT of Rs. 326 million for the quarter was an increase of 138% over the same quarter last year [2010/11 Q2: Rs. 137 million]. The soft drinks and ice creams businesses mainly contributed to this growth with higher volumes and improved margins further strengthening the group’s market leadership in the sector. The retail business saw higher basket values, footfalls and improved margins.
Financial services PBT for the quarter was Rs. 260 million as against Rs. 308 million recorded in the corresponding period in the previous year. The groups banking associate and insurance subsidiary, Nations Trust Bank and Union Assurance displayed healthy growth levels on the back of strong growth in credit and insurance premiums during the period. The performance of John Keells Stockbrokers was impacted by the lower market turnover witnessed in the CSE during the quarter.
Information Technology (IT) recorded a PBT of Rs. 47 million for the quarter, which was an improvement of 38% over the same period last year [2010/11 Q2: PBT Rs. 34 million]. The BPO business has acquired a number of new high profile customers, while the office automation division continued to display strong performance, bolstered by higher volumes in the mobile phone business.
Others comprising plantation services, John Keells Capital and the Corporate Centre recorded a PBT of Rs. 108 million for the quarter, compared to the Rs. 1.93 billion PBT recorded in the same period last year which included the capital gains.
Fitch Ratings Lanka has reaffirmed the credit rating of JKH at AAA (lka); Outlook Stable for the current period. JKH was once again recognised as the ‘Most Respected Entity in Sri Lanka’ in the poll conducted by LMD for 2011 and similarly was ranked No. 1 in the latest Business Today’s Top 20.
