With the March quarter earnings season coming to an end, an independent research firm has added up the overall market earnings of the listed firms in the Colombo bourse to Rs.61 billion, an increase of 15.9 percent from a year ago with the Banks, Finance and Insurance (BFI) sector leading the pack. According to Capital Alliance Research (CAL Research), the stronger March quarter earnings was a result of the weaker economic conditions prevailed during the corresponding quarter of 2015.
Meanwhile, the trailing 12-months market earnings grew 3.3 percent year-onyear (yoy) to Rs.209.2 billion, “supported by low interest rates and improved disposable incomes driving consumption,” CAL said releasing its quarterly earnings update last week. However, it is expected the full effects of the rising market interest rates and indirect taxes imposed from May 2 to dent the earnings in the June quarter. During the quarter, the BFI sector contributed 34 percent to total earnings followed by diversified holdings with 15 percent and beverage, food and tobacco with 14 percent.
Among the largest individual contributors to earnings were, John Keells Holdings (JKH) with 7.4 percent, Hatton National Bank with 5.4 percent, Commercial Bank with 5.3 percent, Ceylon Tobacco with 5.0 percent and Dialog with 4.4 percent. BFI sector earnings grew 15 percent yoy to Rs.20.8 billion, driven by commercial banks’ earnings of Rs.11.9 billion, up 26 percent yoy and, finance and leasing sector earnings of 7.2 billion, up 10 percent yoy. “Banking sector average net interest margin fell 34 basis points to 4.0 percent during the period whilst leasing and finance sector net interest margin fell 172 basis points to 8.5 percent,” the research house said. Beverage, food and tobacco earnings grew 40 percent yoy to 8.4 billion with Ceylon Tobacco Company PLC and Distilleries Company of Sri Lanka PLC accounting for 53 percent of sector earnings. Diversified holdings earnings fell 15 percent yoy to Rs. 9.4 billion with JKH contributing 48 percent to the sector earnings followed by Hayleys PLC with 14 percent. Hotels and travels sector earnings grew 47 percent yoy to Rs.4.8 billion reflecting healthy domestic and foreign tourism activities. Meanwhile, the construction and engineering sector earnings declined 59 percent yoy to Rs.276 million, reflecting the slowdown in construction related activities in the country. Healthcare sector too followed suit and saw its earnings narrowing 21 percent yoy to Rs.671 million as its largest contributor, Asiri Hospital Holdings weighing on the sector.