JKH bullish on the economy amidst peace moves

JKH’s profit attributable to equity holders and the profit before tax (PBT) for the six months to September 2006 was Rs.1273 million and Rs.1766 million, respectively which is 13 percent and five percent above the corresponding periods in the previous year. “The drop in PBT, quarter on quarter, was mainly a result of the revenue recognition cycle of the Property Industry Group. The Profit Attributable to Equity Holders, in the second quarter 2006/2007, at Rs.782 million, was a seven percent increase over the Rs.734 million recorded in the comparable period in the previous year,” Ratnayake explained.

John Keells Holdings (JKH) said last week it was positive on the economy while recognising the challenges in the external environment in terms of peace, stability and predictability.

“We are very conscious of those internal actions which are very much in our own control. The relentless pursuit of internal efficiencies via process improvements, training and development and talent retention continues,” company chairman Susantha Ratnayake has said in the company’s third quarter review of the current year, adding that the level of uncertainty created by recent events poses great challenges in the short term.

“We, as the private sector, look to the government for nothing more than “peace” and “an enabling environment” to make our role as value creators that much more effective,” he has said

Ratnayake said they were hopeful that peace talks, scheduled to be held in Geneva later this month, will lead to a real, and sustained, cessation of hostilities. “We applaud the moves made by the two main political parties in uniting to address national issues.”

Group revenue for the quarter, and six months ended 30 September, 2006 at Rs.8.19 billion and Rs.15.76 billion respectively were 5 percent and 11 percent above the Rs.7.82 billion and Rs.14.17 billion recorded in the comparable period in the previous year.

The Transportation Industry Group performed well in the quarter under review improving its PBT of the previous year on the back of strong volume growth at the Port. “Volumes at the Colombo Port have increased by 25 percent in the first nine months of the calendar year,” Ratnayake has said, adding that the Leisure Industry Group, although showing better results than the corresponding period of 2005/06, performed well below expectations with the Maldivian resorts recording strong profitability, with tourism arrivals in the Maldives showing significant growth.

“The tourism industry in Sri Lanka has not shown the anticipated improvements, primarily because of the volatile country situation, and this has resulted in the resort and city hotels performance falling short of expectations. The Destination Management businesses showed moderate profitability compared to a loss in the corresponding period,” he said.

The Property Industry Group, in the quarter under review, recorded a PBT of Rs.191 million as compared to the Rs.418 million in the corresponding quarter of the previous year. “The revenue cycle of the “Monarch Apartments” development was such that the revenue recognition in the subject quarter was significantly lower than that in the corresponding quarter of the previous year,” Ratnayake said, adding that it will be completed mid-2007.

The Financial Services Industry Group performance in the second quarter was below the comparable figure for the previous year which had reflected the full profits from Mercantile Leasing Limited, prior to the merger with Nations Trust Bank.