Indonesia to seek compensation from US in tobacco spat

Indonesia will seek compensation from the United States for pulling its clove cigarettes from shelves despite a World Trade Organisation (WTO) ruling that deemed the ban discriminatory.

Indonesia’s trade ministry said it had lost between $200 million and $300 million annually from the 2009 ban, aimed at helping prevent youths from taking up smoking.

Sri Lanka’s diversified premier blue chip John Keells Holdings PLC (JKH) yesterday said its net profit for the three months ended June 30, 2013 (1Q14) fell 4 percent Yearon-Year to Rs.1.58 billion with the two main business segments of the group, transportation and leisure, putting up weaker performances.

The revenue during the three months under review remained flat at Rs.20 billion compared to the corresponding quarter of the previous year with gross profit edging down one percent Year-onYear to Rs.5 billion. The operating expenses rose 20 percent YoY to Rs.734 million.

However, during the three months, the group’s net finance income doubled to Rs.954 million against the same quarter of the previous year.

A segmental analysis showed that the transportation sector post tax profit falling to Rs.704 million against Rs.886 million recorded in the corresponding quarter of the previous year.

The leisure sector reported a post tax profit of Rs.394 million against Rs.603 million in the same quarter of the previous year.

The post tax profit of the property segment rose to Rs.126 million from Rs.42 million while consumer foods and retail segment’s profit fell to Rs.185 million from Rs.264 million reported in the corresponding period of the previous year.

According to JKH Chairman Susantha Ratnayake, the results of the first quarter of the financial year are a reflection of current macroeconomic challenges emanating from the decisive actions taken by the government, including the implementation of cost-based electricity pricing.

As he pointed out, the decline of profits in the group’s transportation business was mainly on account of a lower contribution from the bunkering business as a result of lower volumes and reduced margins, a phenomenon experienced by the industry globally.

“…the ports, logistics and airline businesses also saw reductions on the back of changes in volumes and revenues,” he said.

The weaker performance of the tourism sector was attributed to the lower than expected performance of Sri Lankan resorts. The group also operates resorts in Maldives.

“Whilst overall tourism arrivals to the country continue to demonstrate growth, they have not translated into room nights in the star category hotels. This, we believe, is the result of a combination of the economic issues in Europe and the lack of a focused destination marketing and branding strategy.”

“However, occupancy continued to be strong in the City Hotels where we increased our market share, while the Maldivian Resorts sector performed well benefitting from higher average room rates and increased occupancies,” Ratnayake said.