JKH profits hit by leisure sector slump

John Keells Holdings’ (JKH) profits were hit by its leisure sector decline which saw a profit before tax (PBT) of Rs. 901 million in the third quarter of 2017/18 which is a decrease of 34 per cent over the third quarter of the previous financial year (2016/17 Q3: Rs. 1.36 billion).

The decline in profitability was attributed by the group chairman, Susantha Ratnayake to the hotel sector in his statement. This sector witnessed a decline in occupancies primarily as a result of the increase in room inventory within Colombo. “However, it is encouraging that the total number of rooms occupied in the city witnessed a double-digit growth in the quarter under review. Whilst the Sri Lankan resorts segment recorded an improvement in room rates and maintained occupancies, profit for the quarter under review was lower when compared to the corresponding period of the previous financial year which included the operations of ‘Bentota Beach by Cinnamon’ which is now closed for the construction of a new hotel,” Mr. Ratnayake has said.

The Maldivian resorts segment recorded an improvement in average room rates, although profitability was impacted by lower occupancies and the partial closure of ‘Ellaidhoo Maldives by Cinnamon’ for refurbishments in October 2017. “However, occupancies at our hotels remained above the industry average during the quarter under review,” Mr. Ratnayake has said.

The property industry group PBT of Rs. 34 million in the third quarter of 2017/18 is a decrease of 83 per cent over the third quarter of the previous financial year (2016/17 Q3: Rs. 196 million). “The decline in profitability is on account of the third quarter of the previous year which included recognition of revenue on the ‘7th Sense’ on Gregory’s Road residential development. The construction of Cinnamon Life is progressing well with the super structure approximately 50 per cent complete.”

Parallel to the ongoing construction work of the super structure, the installation of the façade of the hotel will commence shortly, the statement said. Construction work on the main access point via a six lane bridge is nearing completion. The pre- sales of both the residential and commercial space continue to be encouraging, Mr. Ratnayake has added. The concept design for the new 800-apartment joint venture residential development project, ‘ Tri-Zen’, in Union Place, Colombo, has been finalised whilst the schematic designs are currently underway. This unique development will target a broader section of the market with apartments offered at attractive price points. Pre- sales have commenced and initial bookings are very encouraging, Mr. Ratnayake has noted.

The group PBT for the first nine months of the financial year 2017/18 at Rs. 14.87 billion is a decrease of 4 per cent over the PBT of Rs. 15.48 billion recorded in the same period of the previous financial year he has said. The group PBT at Rs. 5.83 billion in the third quarter of the financial year 2017/18 is a decrease of 13 per cent over the Rs. 6.72 billion recorded in the corresponding period of the previous financial year.

“The profit attributable to shareholders in the first nine months at Rs. 11.06 billion is a decrease of 2 per cent over the corresponding period of the previous financial year while the Rs. 4.49 billion recorded in the third quarter is a decrease of 13 per cent over the previous year,” Mr. Ratnayake has said.

The cumulative revenue for the first nine months of the financial year 2017/18 in the group at Rs. 87.66 billion is an increase of 15 per cent over the revenue of Rs. 76.43 billion recorded in the same period of the previous financial year he has said. The revenue at Rs. 31.22 billion for the quarter under review is a 12 per cent increase over the Rs. 27.94 billion recorded in the previous financial year.

The company’s PBT for the first nine months of the financial year 2017/18 at Rs. 7.90 billion is an increase of 7 per cent over the previous financial year. The company PBT for the third quarter of 2017/18 at Rs. 2.36 billion is a decrease of 16 per cent over the Rs. 2.83 billion recorded in the corresponding period of 2016/17.