Poor performance of Lankan and Maldivian operations hurts John Keells Hotels 3Q

John Keells Hotels PLC (KHL) continued to remain in red for the consecutive third quarter ended December 31, 20419 (3Q20), amid higher losses recorded by the group’s both Sri Lankan and Maldives operations.

According to the interim financial accounts released to the Colombo Stock Exchange, KHL recorded a net loss of Rs.389.5 million for the quarter under review, against a net profit of Rs.185.8 million a year ago.

The loss per share for the period was 27 cents, against earnings per share of 13 cents.

The group top line fell 8 percent year-on-year (YoY) to Rs.2.6 billion.

KHL made an operating loss of Rs.301.9 million for the quarter under review, against an operating profit of Rs.275.5 million YoY.

The group’s net finance expenses rose 826 percent YoY to Rs.179.5 million. 

KHL had closed down a few of its resort hotel properties in Sri Lanka and the Maldives for refurbishments. Cinnamon Bentota Beach, which was closed in 2018, was recently opened for commercial operations.

The company is also constructing 212-room Cinnamon Red Kandy, in which it has a 40 percent stake and is set to open in the second half of 2020/21. 

The Easter Sunday attacks in April last year dealt a crippling blow to Sri Lanka’s tourism industry. KHL operates nine resorts both in Sri Lanka and the Maldives—a mix of four and five-star rooms.

The Sri Lankan resort cluster of the group made an after-tax loss of Rs.77.5 million in 3Q20, against a profit of Rs.71.7 million a year ago while the Maldives cluster made post-tax loss of Rs.312 million, against profits of Rs.114 million.

For the nine months ended December 31, 2019, KHL’s net losses widened to Rs.1.29 billion, from 74.6 million a year ago, as the group top line fell 18 percent YoY to Rs.6.02 billion.

  
The finance expenses rose sharply to Rs.307.7 million, from Rs.29.9 million a year ago. 

As of December 31, 2019, John Keells Holdings PLC had an 80.32 percent stake in John Keells Hotels PLC while the Employees’ Provident Fund held a 5.39 percent stake being its second largest shareholder.