Sri Lanka’s foremost conglomerate, John Keells Holdings (JKH) Group’s profit before tax (PBT) is a negative Rs.2.43 billion in the first quarter of the financial year 2020/21 compared to the Rs.1.36 billion recorded in the previous financial year, the latest annual financials of the JKH highlights.

Company’s Chairman, Krishan Balendra said in his review, “The profit attributable to equity holders is a negative Rs.1.66 billion compared to the Rs.994 million in the corresponding period of the previous financial year.

Meanwhile, the Company’s PBT for the first quarter of 2020/21 at Rs.909 million is a decrease of 47% over the Rs.1.72 billion recorded in the corresponding period of 2019/20.

The Group's revenue at Rs.21.60 billion for the period under review is a decrease of 32% over the Rs.31.74 billion recorded in the previous financial year and the Group earnings before interest, tax, depreciation, and amortisation (EBITDA) at Rs.802 million in the first quarter of the financial year 2020/21 is a decrease of 78% over the EBITDA of Rs.3.57 billion recorded in the previous financial year.

EBITDA excludes the impact of exchange losses and gains on its foreign currency-denominated debt and cash to demonstrate the underlying cash operational performance of the businesses.

“As expected, the performance in the quarter under review was significantly impacted and extremely challenging on account of the stringent lockdown measures prevailing for the first one-and-a-half months of the quarter,”  Balendra stated.

However, he stated that post easing of the strict lockdown measures from mid-May, the underlying month-on-month performance of the Transportation, Consumer Foods, Retail and Financial Services businesses displayed a faster than anticipated recovery momentum reaching almost pre-COVID-19 levels.

The proactive cost containment and productivity improvement measures undertaken to strengthen the Group’s financial and cash position from the beginning of the quarter, combined with the recovery momentum in business activity, enabled the Group to record cash profits despite the extremely challenging operating conditions.

Balendra stated that given the faster than anticipated recovery momentum in business activity and the generation of cash profits by the Group, a first interim dividend of Rs.0.50 per share, amounting to a payout of approximately Rs.659 million, was declared to be paid on or before 28 August 2020.

This reflects the positive outlook the Group has in the current circumstances for its portfolio of businesses and the generation of cash profits in the Group, despite the impacts on the Leisure business on the overall performance of the Group.

"Group’s Leisure business was significantly impacted during the quarter given the suspension of operations of our hotels in April and May on account of the closure of the airports in Sri Lanka and the Maldives and the lockdown measures in Sri Lanka," he said.

“The Maldivian airport was opened for arrivals in mid-July. While bookings for the next few weeks are low, we are encouraged by strong forward bookings for the peak season of January to April 2021, exceeding the bookings we had for the same time last year. Whilst Sri Lanka is yet to re-open its airport, our hotels in Sri Lanka have now commenced operations where the recovery of domestic tourism has been encouraging,” Balendra added.

He further stated that the Consumer Foods businesses has displayed a faster than expected recovery in volumes post the easing of the lockdown in May. In the month of June, the Frozen Confectionery and Convenience Foods recorded positive volume growth whilst the Beverage business recorded a low single-digit decline.

“The week-on-week momentum of same-store sales of the Supermarket business displayed signs of recovery,” he said.

The Group’s Bunkering business, Lanka Marine Services, recorded an increase in profitability driven by improved margins despite a reduction in the overall market volumes due to lower throughput in the Port of Colombo.

“Construction resumed at ‘Cinnamon Life’ in mid-May after a 2-month closure and it is encouraging to note that the momentum is gradually reaching pre-COVID-19 levels. The Group is working closely with the contractor to ascertain the impact of the COVID-19 disruptions on the overall timelines of the project. The finishing work of the apartment and office towers are being re-sequenced to be completed within the financial year to enable handover,” he stated.

“The profitability of Nations Trust Bank recorded an increase despite pressure on margins, due to the positive impact on account of the removal of the Debt Repayment Levy from January 2020 onwards.  Due to the deployment of cash equity to fund the ‘Cinnamon Life’ project, Group profitability for the quarter was impacted by a year-on-year decrease in finance income, as expected,” he added.

John Keells Holdings PLC, a Sri Lankan company, is also the largest company listed on the Colombo Stock Exchange, which operates over 70 companies in 7 diverse industry sectors, and, in 2020, commemorates 150 years of being in business. The Group provides employment to over 14,000 persons and has been ranked as Sri Lanka’s ‘Most Respected Entity’ for 14 years. Whilst being a full member of the World Economic Forum and a Member of the UN Global Compact, John Keells Group drives its vision of “empowering the nation for tomorrow,” through the John Keells Foundation and through the social entrepreneurship initiative, ‘Plasticcycle’, is a catalyst in scientifically reducing plastic pollution in Sri Lanka.