Hotel sector achieves peak revenue growth among NFCs: CB

• Hotel sector saw revenue expand by 39.2%
• But saw net profit contract by 35.4%
• Healthcare and services sector among top three to witness revenue growth
• Steep revenue dip seen in real estate, manufacturing and automobile 
• NFC sector as a whole saw net profit contract by 53.3% YoY

Looking at the sector-wise performance of the non-financial corporates (NFCs), the hotel sector recorded the highest revenue growth for the first nine months ending in September 2023, the Central Bank said. 
For the period under review, the hotel sector saw revenue expand by 39.2 percent. 
The latest Financial Stability Review released by the financial sector regulator recently attributed the revenue growth to tourist arrivals. Tourist arrivals to the island nation exceeded one million from January to September 2023, compared to the low base during the corresponding period of the previous year. 
Alongside the hotel sector, the services and healthcare equipment and services sectors recorded a year-on-year (YoY) revenue growth, exceeding 20 percent.
“However, significant declines in revenue were evident in several sectors, including real estate, manufacturing, automobile, chemicals and pharmaceuticals and trading and distribution. 
The performance of the real estate sector was hindered by the deteriorating business conditions and increased cost of raw materials in the country,” the Central Bank said. 
The scarcity of imported raw materials, a slowdown in most advanced economies and reduced capital investments, due to the high cost of borrowing, led to the manufacturing sector to forgo revenue growth. 

The sustained slump in revenue in the automobile sector was primarily driven by the import ban imposed on vehicles in March 2020. 
In terms of profit, the NFC sector witnessed an overall net profit contraction of 53.3 percent YoY during the nine months ending in September 2023. 
This was primarily attributed to a significant YoY decline in the finance income of 37.7 percent and a notable YoY increase in finance costs of 29.4 percent. 
However, the relaxed monetary policy stance is expected to reduce the finance cost and would positively affect the net profit during the period ahead. The share of NFCs that reported an increase in corporate net profit, compared to the previous year, almost halved from 69.4 percent to 36.4 percent during the nine months ending in September 2023.
Although many sectors recorded an increase in revenue growth, all sectors other than the telecommunication services and automobile sectors observed a notable decline in net profit during the nine months ending in September 2023.
“Heightened cost components, including increased costs of sales, distribution and administration expenses contributed to the decline in net profits,” the report said.
A significant decrease in income components, particularly in other income and finance income, further exacerbated the decline in net profit. 
The telecommunication services sector demonstrated a notable YoY growth, with a significant increase of 167.9 percent in net profit amid low growth in revenue, mainly due to increased foreign exchange gains. 
Even with a decrease in revenue, the automobile sector managed to secure the second highest growth in net profit, primarily owing to the decrease in finance costs and net profit margin is a result of increasing indirect expenses comprising distribution, administration and finance costs, alongside a simultaneous decline in indirect income sources, namely other operating income and 
finance income.