• Says impacts from travel restrictions less pronounced on group’s biz during quarter
• Except for consumer foods, all other segments record improvement in profitability 
• JKH Chairman says business activity has seen a strong recovery to ‘near normal’ levels since July

Sri Lanka’s premier blue chip John Keells Holdings PLC (JKH) recorded a steady performance for the June 2021 quarter (2Q22), as the impacts of the COVID-19-induced travel restrictions during the quarter were less pronounced on the group’s business compared to the 
previous year. 

For the quarter under review, JKH recorded earnings of Rs.1.16 a share or Rs.1.5 billion, on a revenue of Rs.38.8 billion, compared to a loss of Rs.1.26 a share or Rs.1.6 billion reported for the corresponding quarter of the previous year.

A comparison of the performances between the two corresponding quarters is somewhat distorted, as the virus-related restrictions were largely lenient during 1Q22, compared to 1Q21.

Besides, JKH Chairman Krishan Balendra said the group was able to perform better during 2Q22, compared to 2Q21, “given the better insights on consumer behaviour and business momentum, which aided the businesses to better navigate through this outbreak”.

He also said, “Since the easing of the restrictions from early July 2021, barring inter-provincial travel for non-essential services, business activity has seen a strong recovery to ‘near normal’ levels.”

However, the impact on the group during the quarter under review is clearly understood when the 1Q22 performance is compared with the previous quarter (4Q21).

Even though the group was able to maintain its revenue almost at the same level during 1Q22, compared to 4Q21, the impact stemming from the restrictions can be clearly seen in significantly higher sales costs, selling and distribution expenses, administrative expenses and finally in the profit figures.  

As a result, the group’s operating profit in 1Q22 fell to just Rs.276 million, from Rs.3 billion in 4Q21. However, this was still a much better performance when compared with the corresponding period of the previous year, where the group reported an operating loss of Rs.1.9 billion. 

However, as Balendra pointed out, the group’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose almost 500 percent year-on-year (YoY) to Rs.4.76 billion during the quarter under review and the EBITDA excluding the leisure industry groups stood at Rs.5.41 billion, which is a 139 percent increase YoY. 

According to a segmental analysis of the performance of JKH’s business segments, the group’s transportation sector, which includes its port business via SAGT, recorded a revenue of Rs.5.6 billion for the quarter under review, compared to Rs.3.1 billion a year ago. The after-tax profit of the segment was Rs.933.4 million, compared to Rs.293.1 million. 

Balendra said further to the execution of a Letter of Intent (LOI) to develop and operate the West Container Terminal in the Port of Colombo, under a joint venture with India’s Adani Ports, work is progressing well towards meeting the conditions stipulated in the LOI, including the finalisation of the project design and costs and other structuring arrangements.

Meanwhile, the group’s consumer foods business, under Keells Foods PLC and Ceylon Cold Stores PLC, recorded revenue of Rs.3.8 billion, up from Rs.3.1 billion a year ago and the post-tax profit of the segment Rs.48.8 million, down from Rs.140.7 million a year ago.

“The beverages, frozen confectionery and convenience foods businesses continued their strong recovery momentum, as all three segments recorded a double-digit growth in volumes. While this growth in volumes and revenue translated to higher gross profits, the overall profitability of the industry group was impacted, due to the higher selling and distribution expenses and to a lesser extent, increased factory-related costs, due to the COVID-19 health and safety protocols,” Balendra said.

The supermarket operations of the group, under Ceylon Cold Stores PLC, saw the revenue surging to Rs.20.1 billion during 1Q22, from Rs.12.3 billion in 1Q21, while the segment’s post-tax profit was Rs.296.6 million, against a loss of Rs.273.4 million a year ago. 

The group’s leisure business recorded higher revenue for the quarter under review, compared to 1Q21 and was able to narrow its post-tax loss to Rs.1.7 billion, from Rs.2.4 billion a year ago.

“The Maldivian Resorts segment continued its recovery momentum from the previous quarter, where the occupancies at our hotels were higher than anticipated during this quarter, while the forward bookings continue to be very encouraging,” Balendra said.

Meanwhile, the group’s property business, led by its flagship Cinnamon Life project, recorded revenue of Rs.3.6 billion for 1Q22, compared to Rs.110 million a year ago and the segment reported a post-tax profit of Rs.271.1 million, compared to a loss of Rs.66.6 million a year ago.

“The handover process of the residential apartment units at ‘Cinnamon Life’ commenced, resulting in the recognition of revenue and profits from sales for the first time in the project,” Balendra said.

The group’s financial services segment, driven by Nations Trust Bank PLC and Union Assurance PLC, recorded higher revenues and profits for the quarter under review, compared to the previous year. 

The Captain family owned nearly 23 percent of JKH, as at June 31, 2021 and the Employees’ Provident Fund had a 0.8 percent stake in the company, as its 20th single largest shareholder.