Access Engineering records robust 3Q despite pandemic

Access Engineering PLC continues to push its top and bottom lines higher, as the group fared well in its most recent quarter ended on December 31, 2020 (3Q21), recovering from the pandemic-induced setbacks on the construction sector.

The construction major reported revenues of Rs.6.1 billion for the quarter under review, compared to Rs.5.9 billion in the same period in 2019, as the group executed multiple projects for both the state and private sectors. 
Construction is one of the few sectors that swung back faster than many others with the end of the lockdowns in mid-May, as the developers cannot afford to make carrying costs for projects held up for long periods. 

Access Engineering was least affected by the pandemic, as majority of its projects are secured by local banks and bilateral and multilateral funding lines, hence less pressure on the group’s liquidity.

The group said, during the quarter under review, it executed the Mannar Wind Power Project, Anuradhapura Water Supply Project, Bloemendal Housing Project, Nanotechnology Building Project, Central Expressway Project, CAMSO Load Star Warehousing Project, Nittambuwa Pasyala Road Project, Stadiumgama Housing Project, iRoad Project and the recently started Elliot Place Building Project.

The group is also engaged in the construction of a T-Mall flyover and several foot bridges in Kenya, as part of its overseas portfolio. 

Access Engineering reported an operating profit of Rs.909.5 million for the quarter under review, compared to Rs.457.6 million in the corresponding period of 2019, as lower costs—both direct and indirect—helped to improve margins. 

The group reported earnings of 68 cents a share or Rs.677.5 million for the quarter under review, compared to 32 cents a share or Rs.322.9 million in the year earlier period in 2019. The group restructured its loans during the period, resulting in substantially lower finance costs, which positively contributed to the bottom line. The segment results however showed the key construction segment, which covers building and infrastructure, falling short slightly in terms of revenue, due to the beginning of the year set back from the pandemic.

But the construction-related materials segment performed extremely well, due to the sale of asphalt concrete followed by ready-mix concrete.  Access Engineering is one of the largest asphalt producers in Sri Lanka and the company made further investments in asphalt plants to cater to the ever-increasing demand for asphalt, due to the road and highway network development in the country. 

The group on January 25, 2021, bought 50 percent shares of Lanka AAC Private Limited, which engages in the business of manufacturing autoclaved aerated concrete (AAC) blocks—a light weight brick used in the construction industry. Meanwhile, the group’s property development pivot is also yielding results with healthy pre-sales backed by lower interest rates. 

While Capital Heights Rajagiriya is nearing its completion, Marina Square, Access Engineering’s iconic real estate project to-date, achieved its third construction milestone during the quarter. The project, which began construction in late 2019, is expected to end the design works in December 2022.

Access Tower I and II experienced a good occupancy too, the group said. 

However, the import restrictions on vehicle imports hampered the performance at its automobile segment, which is represented by Sathosa Motors PLC, the authorised agents for Isuzu vehicles.  Chairman Sumal Perera owns 25 percent of the issued shares of Access Engineering while Managing Director Christopher Joshua has a 10 percent stake. 

The Employees’ Provident Fund has a 2.05 percent stake in Access Engineering, being its 12th largest shareholder.