JKH pre-tax profit for 9-mths to Dec 2020 drops sharply owing to COVID-19
View(s):Sri Lanka’s largest conglomerate, John Keells Holdings (JKH) on Wednesday announced that cumulative group pre-tax profit (PBT) for the first nine months of the financial year 2020/21 was a negative Rs.275 million, a sharp decrease of 104 per cent against the PBT of Rs.7.06 billion recorded in the corresponding period of the previous financial year.
Group profit before tax (PBT) at Rs.1.52 billion in the quarter under review was a 51 per cent decrease against the PBT of Rs.3.11 billion recorded in the third quarter of 2019/20, according to the JKH Chairman Krishan Balendra’s review filed with the Colombo Stock Exchange.
According to analysts, the results were not unexpected as JKH, like many businesses, felt the impact of COVID-19 on business operations particularly in the leisure sector in which JKH has a large exposure and where there were almost zero tourists during the April to December 2020 period.
Group revenue at Rs.35.59 billion for the quarter under review (October-December 2020) was a decrease of 5 per cent against the comparative period of last year (2019/20 Q3: Rs.37.46 billion).
Cumulative group revenue for the first nine months of the financial year 2020/21 at Rs.89.58 billion is a decrease of 13 per cent against the revenue of Rs.102.90 billion recorded in the corresponding period of the financial year 2019/20.
During the quarter, the holding company drew down the final remainder of US$ 75 million of its total $175 million long-term loan facility from the International Finance Corporation (IFC).
Group net debt excluding lease liabilities as at 31 December 2020 was at Rs.42.18 billion, a 6 per cent increase against 30 September 2020 [2020/21 Q2: Rs.39.77 billion].
While the COVID-19 pandemic was contained in the country throughout the second quarter of the financial year, the outbreak of a cluster in early October 2020 led to an increase in the number of COVID-19 cases within the country, which prompted isolation measures in some areas, the report said.
These isolation measures prevailed across the country mainly in the month of October, with an easing of these measures thereafter. The resultant curtailing of movement, however, caused a slowdown in business activity and dampened consumer sentiment resulting in a slower pace of recovery through the months of October and November, exerting pressure on group performance in the quarter under review.
“However, it is encouraging to note that the impact of the isolation measures on business was notably less severe than originally witnessed during the lockdown which was imposed in the first quarter of 2020/21. Activity demonstrated near normal levels in many businesses of the group in the month of December, with the exception of Leisure where domestic travel was yet to show signs of recovery given a certain degree of caution relating to travel and entertainment by customers,” it stated.
Meanwhile the Certificates of Conformity (COC) for the Cinnamon Life office tower and ‘The Suites’ residential tower have been obtained, which will enable hand-over of the residential apartments and office tower to commence, on a staggered basis, from the fourth quarter of 2020/21 (January to March 2021) onwards.