Aitken Spence reports resilient 2Q performance amid challenges

Diversified conglomerate, Aitken Spence PLC, had a subdued September quarter (2Q20) amid the group’s leisure operations feeling the brunt of the Easter Sunday attacks in April, which delivered a crippling blow to the island nation’s tourism industry.

Aitken Spence reported consolidated earnings of 87 cents per share or Rs.355.2 million for 2Q20 compared to earnings of Rs.1.68 per share or Rs.681.9 million reported for the same period last year.

The group reported revenue of Rs.12.3 billion for the period, marginally down from Rs.12.4 billion a year ago. The operating profit fell to Rs.1.06 billion from Rs.1.4 billion
a year ago.

The net finance expenses for the period rose to Rs.421.6 million from Rs.265.7 million a year ago.

For the first six months ended September 30, 2019, the Aitken Spence group reported earnings of Rs.1.41 per share or Rs.571.9 million compared to earnings of Rs.2.32 per share or Rs.943.4 million reported for the same period last year.

The group’s gross revenue for the period rose to Rs.28.6 billion from Rs.26.4 billion while the revenue from external customers rose to Rs.24.8 billion from Rs.23 billion a year ago.
The operating profit for the six months fell to Rs.1.9 billion from Rs.2.1 billion. The profit before tax (PBT) was Rs.1.2 billion, down from Rs.1.7 billion
a year ago.

The group’s tourism sector operations, impacted by Easter attacks, recorded revenue of Rs.9.3 billion down from Rs.10.9 billion a year ago, while making an operating loss of Rs.172.4 million against an operating profit of Rs.286.2 million.

The maritime & logistics sector of the group reported improved performance with higher revenue and an operating profit of Rs.910.2 million, up from Rs.745.5 million a year ago. The main contributor towards the group PBT was the maritime & logistics sector, which recorded a 24.5 percent growth over the previous year. 

The strategic investments segment saw a surge in its revenue to Rs.9.8 billion from Rs.6.4 billion while the operating profit reached Rs.1.01 billion from Rs.933.9 million a year ago. However, the segment’s PBT fell to Rs. 677 million from Rs. 727 million a year ago.

“The significantly lower tea and rubber prices, and the intense competition faced by the printing sector coupled with the costs of the recent investment in South Pacific printing contributed to this effect,” Aitken Spence said in an earnings release. 

The firm also said the construction of its waste-to-energy power plant is progressing steadily and is projected for commercial operations towards the end of the financial year. 
Meanwhile, the group’s services sector reported lower revenues and operating profits compared to the previous year. Aitken Spence said 56 percent of the group’s pre-tax profit was generated through its investments overseas. 

The firm said its Maldivian hotels performed well along with its iconic local properties Heritance Kandalama and Heritance Tea Factory despite the decline in tourist arrivals to the country.
Atiken Spence also said its destination management business was able to maintain its market share of the arrivals to the country. 

“The destination management segment’s Myanmar operations has obtained all licenses and has recently commenced commercial operations,” the earnings release said. 
Business magnate Harry Jayawardena-controlled Melstacorp Limited and Rubicond Enterprises Limited together hold 67 percent of Aitken Spence while the Employees’ Provident Fund has 5.07 percent stake being the third largest shareholder.