Like many conglomerates, JKH reports restrained performance in 2020/21
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JKH Chairman Krishan Balendra
John Keells Group (JKH), one of Sri Lanka’s largest conglomerates, was adversely affected by the pandemic and its wide exposure to the leisure sector – one of the worst hit sectors –, reporting a huge drop in profits for the year ending March 31, 2021.
In a review of its performance in the newly-released annual report, the group said it witnessed a faster than anticipated recovery momentum with the performance of most businesses reaching pre COVID-19 levels with business activity and consumer trends being near normal by the end of the financial year.
Excluding Leisure, the group recurring EBITDA increased by 8 percent to Rs.19.16 billion (2019/20: Rs.17.76 billion).
A consortium consisting of Adani Ports and Special Economic Zone Ltd (APSEZ) and JKH, in the capacity as the local partner, received a letter of intent (LOI) to develop and operate the West Container Terminal at the Port of Colombo as a public private partnership (PPP) project.
The Supermarket business witnessed a sharp quarter-on-quarter recovery momentum in sales, with the fourth quarter same store sales recovering to pre COVID-19 levels, the statement said.
The Consumer Foods business recorded a strong recovery during the year, particularly the performance of the Frozen Confectionery business. The Frozen Confectionery business recorded its highest monthly sales volume in March 2021 in the history of its operations.
“Whilst the opening of the airports is expected to augur well for reviving the tourism industry in Sri Lanka and the Maldives, the performance of the Leisure business will largely depend on the pace of revival of regional and global travel, when travellers regain confidence, particularly with the vaccination drives in many countries. The performance of the Maldivian Resorts and the momentum of forward bookings have been very encouraging,” it said.
With the completion of one residential apartment and the commercial tower at ‘Cinnamon Life’, the hand-over process of the units will commence, on a staggered basis, from the first quarter of 2021/22 onwards, resulting in the recognition of revenue and profits from ‘Cinnamon Life’. Project completion is scheduled for the first quarter of 2022/23.
The Insurance business recorded double digit growth in gross written premiums during the year driven by an encouraging increase in regular new business premiums. The Banking business recorded an increase in profitability driven by focused recovery efforts, cost management initiatives and higher investment income.
Group Chairman Krishan Balendra in his statement said that performance of the group during the year was resilient despite the numerous challenges encountered and it was the positive attitude of all “our people that enabled the group to navigate through this unprecedented and volatile period”.
“Whilst the COVID-19 pandemic was relatively contained in Sri Lanka throughout the financial year, resulting in a strong resumption of business activity, the recent outbreak in late April 2021 has led to a sharp increase in the number of COVID-19 cases within the country, prompting island-wide travel restrictions by the government as at the date of this message. While it is premature to ascertain the full impact of this outbreak and the resultant performance of the group since the number of daily cases is significantly higher than that of the first and second waves, the curtailing of movement is expected to cause a slowdown in business activity in the immediate-term while the pace of recovery will depend on how the situation develops over the next few weeks,” he said.