Distilleries’ June profits up 14% over higher revenues

Distilleries Company of Sri Lanka PLC recorded a higher bottom-line performance for the quarter ended in June, amid the higher prices caused by the January hike in the excise duty.

Sri Lanka’s largest distiller, with a market share of over 70 percent, reported revenue of Rs.37.13 billion for the quarter, up 14.7 percent from the same period last year but the increase in the net revenues languished at a 4.3 percent growth to Rs.12.68 billion.

Sri Lanka raised excise duty on liquor by 5.9 percent in January 2025, to make up for the loss in tax revenue from the increase in the tax-free threshold of personal income.

It is common for the policymakers to target liquor, cigarettes and gaming – together considered as sin industries – to rake in revenues to the government when its coffers run dry.

The company booked a tax expense of Rs.24.45 billion, up from Rs.20.23 billion in the same period in 2024.

In corporate income tax, the company booked a further Rs.3.46 billion for the quarter, up from Rs.2.80 billion a year ago.

Meanwhile, the direct costs of the company fell by 9.3 percent to Rs.4.28 billion, helping the gross profit to rise by 12.9 percent to Rs.8.39 billion.

Lower overheads, consisting of distribution expenses and administrative expenses, helped the company to increase its operating profit by 17.1 percent to Rs.7.65 billion a year ago.

Notably, the company saw its finance cost rising to Rs.107.56 million for the quarter, from Rs.34.75 million a year ago.

This appears to have come from the roughly Rs.2.0 billion increase in the lease liability in the three months, which helped the company to increase its right of use assets by Rs.2.26 billion.

Against this backdrop, the company reported earnings of 92 cents a share or Rs.4.25 billion, compared to 82 cents a share or Rs.3.74 billion in the year earlier period. This translated into a 13.6 percent increase.

The business mogul, the late Harry Jayawardena-controlled Melstacorp PLC, Milford Exports (Ceylon) Private Limited and Lanka Milk Foods Limited together held a 96.63 percent stake in Distilleries Company.