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Melstacorp March profit up 44% on alcoholic beverages and lower tax expenses

1 June 2017 12:01 am - 0     - {{hitsCtrl.values.hits}}

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Melstacorp PLC, the former Distilleries group of companies, reported a net profit of Rs.1.4 billion or Rs.1.20 a share for the January – March quarter (4Q17), an increase of 44 percent year-on-year (YoY) due to lower tax expenses, as the profit from operations was down by 29 percent, the interim results showed.  

Although the group’s cash cow, the alcoholic beverage segment, propelled the group’s top and the bottom lines, other segments—telecommunications and plantations—weighed on the profits with the exception of financial services, which includes an insurance company.    
Distilleries Company of Sri Lanka PLC (DCSL) along with its group entities were listed under Melstacorp PLC in a group restructuring exercise, which saw Melstacorp being the ultimate holding company of the group and DCSL becoming a wholly owned subsidiary of Melstacorp. 
January–March is the first full quarter since Melstacorp was listed as a holding company on the Colombo Stock Exchange.                    
Meanwhile, the group’s cost of sales, which also captured the net benefits paid and interest expenses, rose much faster than the increase in the revenues, while the administrative and finance cost also rose sharply.  
The group earned a gross revenue of Rs.27.4 billion, up 8.0 percent YoY, but was left with only a net revenue of Rs.10 billon as alcohol business had to pay as much as Rs.17 billion as excise duties and taxes on sales.   
The total excise duties and taxes on sales paid for the full financial year ended on March 31, 2017 (FY17), was almost Rs.70 billion on a total revenue of Rs.109.2 billion, up 23 percent. The net revenue was Rs.40.4 billion.
The beverage business was the top revenue and profit earner for the group with revenues of Rs.99 billion, up from Rs.79 billion last year, with an operating profit of Rs.10.4 billion, up from Rs.8.4 billion.   
Meanwhile, for FY17, the group reported earnings of Rs.7.2 billion or Rs.6.16 a share, registering a 20 percent YoY increase. 
The net finance cost virtually doubled to Rs.395.6 million as the group raised additional borrowings when the borrowing costs are on the up.  
The group’s telecommunication business lost revenue and widened its losses to Rs.1.3 billion. The protracted poor financial performance in this segment might prompt the group to divest this unit to an established player in the market. 
Meanwhile the group’s financial services business, which operates a licensed finance company and an insurance company, increased its operating profits by 32 percent YoY to Rs. 307.4 million. 
The billionaire businessman Harry Jayawardena controlled Milford Exports (Ceylon) (Pvt) Limited and Lanka Milk Foods (CWE) Limited collectively held 55.05 percent stake in the group by March 31, 2017.

 

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