Leisure sector profits ease at JKH but group results looking positive
View(s):Pre-tax profits in the leisure sector of John Keells Holdings (JKH) fell in the second quarter of 2015/2016 easing by 23 per cent to Rs.885 million from the previous year’s quarter due to many reasons.The group, in releasing its quarterly results this week, said the drop was mainly on account of the partial closure of Cinnamon Lakeside which negatively impacted overall occupancies and profitability of the city hotels sector.
Cinnamon Red performed well recording an average occupancy of 89 per cent for the period under review. It said that while the depreciation of the Rupee will have a positive impact on the foreign currency denominated revenue streams emanating within Sri Lanka, the Sri Lankan Resorts sector had a negative impact on the translation of its foreign currency denominated debt during the quarter.
“Tourist arrivals into the Maldives witnessed only a marginal increase and this coupled with the increased supply of rooms resulted in a significant increase in overall competition. However, improved operational efficiencies and the resulting cost savings helped partially mitigate the impact. The improved performance of the European and Chinese markets contributed towards a notable growth in profitability for the Destination Management business,” the report said.
In terms of the overall picture, JKH said that pre-tax profit (PBT) for second quarter was Rs.4.64 billion, up 27 per cent over the Rs.3.64 billion recorded in the previous financial year. Cumulative PBT for the first half of the financial year 2015/16 was Rs.7.83 billion, up 17 per cent over the PBT of Rs.6.67 billion recorded in the same period of the previous financial year. Cumulative revenue for the first half of the financial year at Rs.43.68 billion is an increase of 3 per cent over the revenue of Rs.42.20 billion recorded in the same period of the previous financial year.
JKH said the Consumer Foods and Retail industry group PBT of Rs.1.04 billion in the second quarter rose sharply by 109 per cent over the second quarter of the previous financial year. “The performance of the industry group was buoyed by the sustained growth in consumer spending where volumes continued to demonstrate encouraging growth. Ceylon Cold Stores (CCS) recorded an improved performance on account of the Frozen Confectionary and Beverage businesses recording a notable growth in volumes and improved margins. Keells Food Products (KFP) continued to witness a growth in profitability aided by improved operational efficiencies and an encouraging growth in volumes. The Retail sector continued its strong performance with a steady growth in footfall contributing positively towards a year-on-year growth in same store sales,” the statement added.