Aitken Spence’s resumed energy operations energize 3Q profit

Diversified Aitken Spence PLC reported earnings of Rs.2.14 a share or Rs.870.1 million for the December quarter (3Q17) recording an increase of 36.5 percent from a year ago, the interim report showed.
The turnaround in performance stemmed from the group’s power segment, which got activated after its Ace Power Embilipitiya (Pvt.) Limited renewed the power purchase agreement (PPP) with the Ceylon Electricity Board (CEB) for a year in April 2016. 
As a result, the group doubled its revenue to Rs.13.1 billion for the quarter under review from Rs.6.5 billion recorded during the same quarter last year.  
There remains only a remote chance for the PPP not to be renewed for another year as the country’s power sector is in a crisis mode due to the delays in the planned coal and other renewable energy plants by the CEB.
Meanwhile, for the nine months ended December 31, 2016, Aitken Spence reported earnings of Rs.4.09 a share or Rs.1.66 billion, up 17 percent from a year ago.
Revenue soared to Rs.30.5 billion from Rs.18.1 billion recorded during the same period last year.

The group’s strategic investments segment, which comprises power generation among others, recorded revenue of Rs.12.7 billion. This is over a threefold increase from what this segment recorded a year ago.
This segment turned a net profit of Rs.649. 8 million from a net loss of Rs.70.3 million a year ago.
While plantations and printing are also listed under this segment, performance was mainly driven by power business.
The group has also interests in maritime, logistics, tourism and services.
The group’s tourism business, the biggest segment by revenue, suffered a massive set back due to, “unfavourable market conditions in foreign markets, particularly the Maldives and India and the high costs of finance”.
The net profit fell sharply to Rs.388.8 million during the nine months from Rs.1.3 billion recorded in the same period last year.
The top line grew by 24 percent to little under Rs.15 billion.
The group’s maritime and logistics business performed better during the nine months as the net profit rose by 47 percent YoY to Rs.1.1 billion. The segment recorded revenue of Rs.7.42 billion, up 24 percent YoY.
The billionaire businessman Harry Jayawardena-controlled Melstacorp Limited, Rubicond Enterprises Limited and other connected parties held over 62 percent of Aitken Spence, while the Employees’ Provident Fund held a 5.07 percent stake as of December 31, 2016 being the third largest shareholder.