Access Engineering rides on post pandemic construction boom

• Company awarded Rs.43bn contract by Ports Authority to build East Terminal 

Access Engineering PLC recorded a strong December quarter (3Q22) as the post pandemic boom in construction and real estate activities propelled the group’s fiscal performance.

The construction major and the leader in civil engineering reported revenues of Rs.11.34 billion for the October-December 2021 quarter, up 86.2 percent from the same period in 2020 and earnings for the period was Rs.1.07 a share or Rs.1.07 billion, up 57.8 percent. 

For the nine months ended December 31, 2021, the group reported earnings of Rs.2.26 a share or Rs.2.25 billion, up 77.2 percent from the same period in 2020. 

“With the exception of the automobile sector, which was hampered by government-imposed vehicle import restrictions, revenue growth in other key sectors resulted in a steady margin improvement during the quarter,” Access Engineering said in a 
press release. 

Besides its key construction activities, which account for half of the group revenues, Access Engineering has interests in construction related materials, automobiles and property along with a few other non-core segments such as healthcare through Ninewells, a hospital dedicated mainly for women and child care in Sri Lanka. 

Access Engineering share added 10 cents or 0.32 percent to close at Rs.31.00 on Friday.
While a multitude of roads, bridges, housing and other building projects contributed mainly to the construction segment of the group, the highlight during the quarter was the group’s joint venture being awarded with the Rs.43 billion contract to build the East Container Terminal of the Port of Colombo by the Ports Authority.  “This is the single biggest contract awarded to a Sri Lankan-led JV to-date and will be a catalyst in creating future opportunities for overseas project execution in joint partnerships in major marine construction work, for the company,” the company said. 

China Harbour Engineering (CHEC) acts as the technical partner for the project.  For the nine months through December 31, 2021, the construction segment generated revenues of Rs.13.96 billion with an operating profit of Rs.1.46 billion, compared to Rs.11.85 billion and Rs.1.16 billion respectively in the same period in 2020. 

Meanwhile, the group’s construction materials segment which leads the industry in asphalt concrete production did the most in the nine months with revenues of Rs.12.2 billion and operating profits of Rs.1.38 billion, compared to Rs.4.6 billion and Rs.630.3 million respectively in the same period in 2020.  “The ADB and World Bank-funded road development programmes and alternative road network expansion projects are driving up demand for construction materials. Expansion of the expressway network, including Central and Ruwanpura expressway development and the elevated road network is expected to create more demand for construction material in future,” the company said.  Meanwhile the group’s property and real estate segment reported revenues of Rs.616.2 million for the nine months with an operating profit of Rs.398.4 million compared to Rs.504.5 million and Rs.327.9 million in revenues and profits respectively in the same period in 2020.  While its iconic two office buildings in Union Place, Colombo, Access Towers I and II have had very high occupancy levels, its ongoing real estate projects - Capital Heights Rajagiriya and Marina Square - have also fared well with the latter having completed 35 percent of the construction of the apartment floor levels. 

The group’s automobile segment represented by Sathosa Motors PLC, the authorised agent for Japan’s Isuzu branded vehicles was undermined by the prolonged restrictions on vehicle imports as this unit generated revenues of Rs.2.49 billion with an operating profit of Rs.60.7 million.  Employees’ Provident Fund has 2.05 percent stake in Access Engineering being its twelfth largest shareholder.