Leading hotel operator John Keells Hotels PLC saw its group net profits narrowing 13 percent to Rs.364. 6 million from a year ago amid the declining occupancies, the interim results released to the Colombo Stock Exchange last week showed.
The earnings per share (EPS) declined by 4 cents to 25 cents from a year ago. The share however gained 10 cents or 0.73 percent to Rs.13.80 at last week’s close.
John Keells Hotels PLC is the hospitality arm of the country’s premier blue-ship, John Keells Holdings PLC (JKH) and operates with a portfolio of eleven hotels and over 1,336 room inventory in both Sri Lanka and Maldives.
“Sri Lankan resorts sector witnessed an increase in average room rates although occupancies declined marginally due to increased room inventory coupled with a decrease in arrivals from the Russian market,” said the JKH Chairman, Susantha Ratnayake on the group’s leisure sector performance in a results note released last week. However, contrary to this, tourism arrivals to the country topped 1.8 million in 2015 from1.5 million in 2014.
Further the group’s city hotels sector, with the exception of Cinnamon Red has also witnessed a decrease in occupancies against the corresponding period of the previous year due to the increased supply of rooms within Colombo and the lower volumes generated through the corporate and Meetings, Incentives, Conferences, And Events (MICE) segment.
The discrepancy between the arrivals and room occupancy demonstrates a flow of tourists from the graded hotels in the formal sector to informal sector guest houses and home stays.
The company’s top-line edged down 1 percent year-on-year (yoy) to Rs.2.87 billion while the gross profit fell by 2 percent yoy to Rs.1.97 billion.
The segmental analysis showed the operations from the Sri Lankan hotels earning a net profit of Rs.150.7 million, up just under10 percent yoy. The segment revenues
The Maldivian operations were negatively impacted by the decline in arrivals due to prevailing political uncertainties and travel advisory to the country, Ratnayake said.
The net profit from Maldivian operations declined by 23 percent yoy to Rs.216.8 million while the top-line slipped by Rs.20 million to Rs.1.54 billion.
The group finance costs declined 28 percent yoy to Rs.42.1 million as there was retirement of debt during the period.
Meanwhile, for the nine months ended December 31, 2015, the group posted a net profit of Rs.845.9 million (EPS of 58 cents), down 5 percent yoy. The top-line was Rs.8 billion, up just 1 percent yoy.
The nine months net profit of the Sri Lankan operations rose by 13 percent yoy to Rs.259.8 million while the net profit of the Maldivian operations contracted 11.2 percent yoy to Rs.590.5 million.
As of December 31, 2015, JKH held 80.32 percent stake in the company followed by the state-controlled private sector pension fund, Employees’ Provident Fund with a 5.39 percent stake.