JKH March net slips as key segments slow down

Premier blue chip John Keells Holdings PLC (JKH) saw its March quarter (4Q16) net profit slipping by 13 percent year-on-year (yoy) to Rs.4.52 billion amid the conglomerate’s several key business segments underperforming, the interim financial accounts filed to the Colombo bourse showed. The earnings per share (EPS), accordingly, deteriorated to Rs.3.80 from Rs.4.58. JKH share however rose 19 percent or 30 cents to close at Rs.158 during yesterday’s trading. Despite the revenue for the quarter remaining flat at Rs.24.9 billion, JKH was able to boost its top line by 10 percent yoy to Rs.8.47 billion amid a 4 percent yoy reduction in cost of sales.

“Revenue growth was impacted by the substantial decrease in oil prices affecting revenues in the bunkering business and from the divestment of the general insurance business in 2014/15,” JKH said in a brief earnings note.

The slowing down of dues stemming from other operating income and higher selling and distribution expenses pushed the operating profits down 16 percent yoy to Rs.4.68 billion. The finance costs rose at a faster pace of 317 percent yoy to Rs. 528.9 compared to finance income, which grew by 48 percent yoy to Rs.2.15 billion. The transportation operations of the group saw its revenue falling to Rs.1.99 billion during the quarter under review from Rs.3.6 billion reported for the corresponding quarter of the previous year.

The operating profit fell to Rs.111.5 million from Rs.170.3 million. The post-tax profit edged down to Rs.704.1 million. The property segment also saw its revenue coming down significantly to Rs.688.1 million from Rs.1.96 billion. The operating profits of the segment nevertheless ended up higher at Rs.663.5 million compared to Rs.651.9 million. However, consumer retail and leisure segments somewhat offset the impacts stemming from transportation and property sectors with sustained performances.

The revenue of consumer retail segment rose to Rs.10.17 billion from Rs.8 billion while the segment’s operating profit stood at Rs.1.41 billion, up from Rs.912.7 million. The post-tax profit of the segment was Rs.1.06 billion, up from Rs.664.8 million. The leisure segment reported a revenue of Rs.7.48 billion, flat compared yoy, with an operating profit of Rs.2.37 billion, slightly up from Rs.2.26 billion. The post tax profit of the segment was Rs.2.03 billion, marginally up from Rs.2.01 billion. Despite higher revenue, financial services segment of the group recorded significantly lower profits while information technology segment turned in a post-tax loss. Meanwhile, for the financial year ended March 31, 2016, JKH reported a net profit of Rs.14.07 billion, down 2 percent yoy. The EPS fell slightly to Rs.12.12 from Rs.12.63. JKH group has currently undertaken a massive integrated resort development project worth over US $ 800 million in the heart of Colombo under the Cinnamon Life theme which is slated to be completed in 2019.

As at March 31, 2016, Broga Hill Investments Limited, a special purpose investment vehicle of Malaysia’s sovereign wealth fund Khazanah Nasional Berhad remained as the single largest shareholder of JKH with a 10.4 percent stake followed by high net worth investor Sohli Captain with a 10.1 percent stake. State-controlled private sector pension fund Employees’ Provident Fund held a 1.4 percent of the company, being 13th largest shareholder.