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Expolanka 3Q net down 47% amid sell offs

9 February 2015 04:57 am - 0     - {{hitsCtrl.values.hits}}

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Diversified freight and logistics group Expolanka Holdings PLC saw its December quarter (3Q15) net profit declining by as much as 47 percent year-on-year (YoY) to Rs.362.2 million, amid selling off its non-core business units.

 

The earnings per share fell to 19 cents from 35 cents a year ago.Since November 2013, Expolanka, which hitherto had a vastly diversified business portfolio, started selling off its non-core business units to restructure the group surrounding its core competencies in freight and logistics.

The restructuring gained further momentum particularly after the Japanese logistics company, SG Holdings Global (Pvt.) Limited bought a controlling stake (51.43 percent) in the group in May, last year. In November 2013, the group divested its two food sector subsidiaries– Expolanka commodities (Pvt.) Limited and Lanka Premier Foods (Pvt.) Limited– for a consideration of Rs.550 million and disposed a 38 percent stake it had in higher education sector arm, Asia Pacific Institute of Information Technology (APIIT) for Rs.663.7 million in the following month. However, in November 2014, the group further divested eight subsidiaries for a consideration of Rs.740 million, with a capital gain of Rs.116.5 million.

“The continued restructuring of the sector resulted with the divestment of tea, healthcare and food catering businesses during November 2014. Given the high risk exposure and the volatile nature of returns in the divested businesses, we expect these strategic changes to boost sector performance,” Expolanka Group CEO Hanif Yusoof said in a statement. Further, as a part of the restructuring exercise the company entered into a sale and purchase agreement to sell its land located on Avissawella road for a purchase consideration of Rs.421 million.

The company is hopeful the transaction will go through on or before November 30, 2016.Meanwhile, the group posted consolidated revenue of Rs.13.4 billion for the quarter under review, up 2.5 percent YoY, with a gross profit of Rs.2.2 billion, up by 4 percent YoY. Other income and gains (unclassified) however declined by 70 percent YoY to Rs.180.8 million. On a positive note the finance cost of the group was down by 51 percent YoY to Rs.24.7 million. However, the associate and joint venture companies turned in a loss of Rs.4.1 million, from a profit of Rs.3.8 million a year ago. Meanwhile, for the nine months ended December 31, 2014, the group earned a net profit of Rs.669.3 million, down 50 percent YoY on revenue of Rs.38.7 billion, down 6 percent.

The group’s key segment, freight and logistics, saw a 17 percent YoY contraction in profits during the nine months to Rs.716.7 million but the revenue increased by 10 percent YoY to Rs.28.7 million. The better performance was able due to the profit growth in Sri Lankan and Indian entities but such performance was hampered by the Bangladesh operations due to challenges faced in their apparel sector.

“Indonesian trade continues to maintain the momentum gained in the previous two quarters fuelled by increased volume from Europe and the US,” Yusoof said. Travel and leisure segment increased both its top line and bottom line by 15 percent and 106 percent, respectively to Rs.2 billion and 107.7 million.
The international trading and manufacturing segment saw its revenues declining by 39 percent YoY to Rs.7.4 billion but the net profit rose by 3 percent YoY to Rs.81.7 million.
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