SOE losses surge as State banks’ profits swoon

• Losses of 52 key SOEs expand to Rs.10.4bn in Jan-Aug. period from Rs.1.1bn in 2019
• Spike in losses resulted by lower profits of three major State banks due to pandemic
• BOC, People’s Bank and NSB made combined profit of Rs.24.6bn, down from Rs.59.9bn in 2019

Losses of State-owned enterprises (SOEs) spiked to Rs.10.4 billion in the eight months to August, 2020, from a combined loss of Rs.1.1 billion in the whole of 2019, predominantly due to the earnings swoon in key State-run banks and the insurance company.  

The data released recently captures the financial performance of 52 key SOEs from January through August.

If not for the lower earnings of the three major State banks—Bank of Ceylon (BoC), People’s Bank and National Savings Bank (NSB), due to the effects of the pandemic, the cumulative profits of the SoEs would have turned positive as a number of other State-owned businesses improved their financial performances in 2020 even amid virus related disruptions to their operations. 

For instance, Ceylon Electricity Board (CEB) and the Ceylon Petroleum Corporation (CPC) cut their losses significantly to Rs.31.7 billion and Rs.4.4 billion respectively, from Rs.85.4 billion and Rs.11.8 billion in 2019. 

The three State banks made a combined profit of Rs.24.6 billion in the eight months ended in August 2020, compared to Rs.59.9 billion in the whole of 2019. Sri Lanka Insurance Corporation’s profits slumped to Rs.3.6 billion from Rs.18.9 billion in 2019. 

Meanwhile, SriLankan Airlines Limited was able to cut its losses to Rs.36.4 billion in the eight months in 2020 from Rs.44 billion in 2019.

Milco Private Limited made a profit of Rs.430 million for 2020 against a loss of Rs.619 million in 2019, the company said last week.

The National Livestock Development Board (NLDB), the other State-owned dairy milk producer, managed to cut its seven-month losses to Rs.69 million from Rs.510 million in 2019. 
Lanka Sathosa Limited’s eight-month losses were reduced to a little over a billion rupees from Rs.1.8 billion in 2019. 

Meanwhile, one of the benefactors of the pandemic, the healthcare and the pharmaceutical sector did well enough to increase their profits as local manufacturing of medical drugs amplified. 

The State Pharmaceutical and Manufacturing Corporation (SPMC) increased its eight-month profits to Rs.838 million from Rs.592 million in 2019. 

The State Pharmaceutical Corporation (SPC) profits however slumped to Rs.675 million from Rs.2.2 billion in 2019, perhaps caused by the disruptions to its distribution channels. 
Meanwhile, the State-owned media networks cut their losses in the first eight months. 

Independent Television Network Limited (ITN) cut its losses to Rs.420 million from Rs.597 million in 2019 while Sri Lanka Rupavahini Corporation managed to bring down its losses to Rs.330 million from Rs.467 million.

Sri Lanka Broadcasting Corporation reduced its losses to Rs.12 million from Rs.29 million in 2019. 

State-owned media incur losses despite heavy advertising revenue they make, largely due to overstaffing, as a result of politicization of such institutions.