Aitken Spence records lower pre-tax profit for2019-20 amidst unprecedented challenges
View(s):Aitken Spence PLC has remained resilient for the financial year ending March 2020 despite severe challenges during a period in which two disastrous events – the Easter Sunday attacks and the COVID-19 pandemic – occurred.
The group’s financial performance for the 12 months ending March 31, 2020 saw a lower year-on-year profit-before-tax (PBT) of Rs. 4.2 billion compared Rs. 7.3 billion last year.
“Despite considerable economic headwinds the organisation’s agile strategy was reflected in the earnings from the overseas businesses that contributed 39 per cent compared to 43 per cent last year. This underlined the exceptional relationships that have been built with global industry players across the key sectors. The group’s businesses from the domestic market derived 61 per cent earnings of the group’s PBT for 2019/2020 compared to 57 per cent in the previous year,” the group said in a media release.
Total revenue of the group for the year under review was Rs. 53.5 billion, a 4 per cent drop from the previous year, primarily due to a reduction of revenue from the tourism sector which was affected by the significant impacts mentioned above. However, the drop was compensated by the commencement of the operations during the third quarter of the year of Heritance Aarah, the flagship hotel in the Maldives.
Total assets of the group rose by 14 per cent to Rs. 140 billion. The group invested Rs. 10 billion in capital expenditure across many sectors with the highest investment incurred in the power generation segment to fund the construction of the pioneering waste to energy power project, the first of its kind in Sri Lanka.
The release said the tourism sector recorded a loss before tax of Rs. 15.3 million compared to a profit of Rs. 3.1 billion last year. This sector was hardest hit by the Easter terror attacks at the beginning of the year with dramatic declines in tourist arrivals in the following months. Overall, performance of the overseas tourism sector was dampened by the increased depreciation and interest costs related to Heritance Aarah which is inevitable due to the capital intensive and long-term nature of the industry.
“Heritance Kandalama and Heritance Tea Factory made profits despite the setbacks. This was owing to the differentiated marketing strategy that helped to mitigate losses, carving out a niche that could be finetuned to enhance yields over time. Aitken Spence Travels handled around 14 per cent of organised tourist arrivals to country underlying its position as the market leader and providing a healthy contribution to the group and the country, to accelerate and strengthen the recovery of this key economic sector,” it said.
The Maritime and Freight Logistics sector contributed a PBT of Rs. 2.25 billion which was once again the largest contributor accounting for 54 per cent of the group profits.
The Strategic Investments sector recorded a PBT of Rs. 1.7 billion compared to Rs. 1.8 billion last year. Steady progress has been made in the country’s first waste to energy power plant although the final commissioning is likely to be delayed given the challenges with the current situation.
The release said that performance of the plantations segment was commendable despite the lower prices of tea experienced throughout the financial year due to its business diversification strategy.