SLT June quarter profit hampered by higher costs, forex losses and depreciation
„Mobitel revenue up but profit down 10% „Company assets damaged due to floods & Salawa fire „Damage yet to be measured but says will not be major „1H16 investments Rs.9.0bn, borrowings Rs.7bn
The Sri Lanka Telecom PLC group’s (SLT) net profit plunged 39 percent for the quarter ended June 30, 2016 (2Q16) to Rs.1.1 billion due to higher operating costs, foreign exchange losses and depreciation charge made against the investments in new technologies, the interim accounts filed with the Colombo Stock Exchange showed. The earnings per share deteriorated to 61 cents from one rupee a share during the 12 months.
Despite the top line rising by 8.9 percent to Rs.18.3 billion from a year ago, the operating costs rose by a faster 16 percent or Rs.1.9 billion to Rs.13.4 billion.
As a result, the operating profit before depreciation and amortization fell by 7.5 percent to Rs.4.9 billion. The foreign exchange losses further troubled the performance during the period as such losses widened to Rs.265 million from Rs.79 million a year ago.
The depreciation rose by 4.5 percent or Rs.144 million to Rs.3.3 billion as a result of, “investments in new technologies and network requirements”, the company said in a press release.
During the six months to June, the company has invested as much as Rs.9 billion in assets, an increase from Rs.6.7 billion made during the same period last year. The total borrowings made during the period were Rs.7.4 billion.
The company said the May floods and the explosion at Salawa Army Camp in Kosgama had caused damages to certain assets but did not say the extent of the damage nor made provisions for such in its financial statements.
The company only said the extent of the damage was still being calculated.
“At present the extent of the damage is being calculated by a committee appointed jointly by the Chief Financial Officer, Chief Regional Officer and Chief Network Officer. Management is of the view that the impact may not be significant due to the nature and type of assets affected by these events,” a note to the financials stated.
It has been almost three months since the floods wreaked havoc in certain parts of the island and Salawa fire erupted on June 5 – more than two months to date.
Meanwhile, for the six months ended on June 30, 2016 (1H16), the group made a net profit of Rs.2.8 billion, again a contraction of 20 percent over the same period last year.
The earnings per share fell to Rs.1.56 from Rs.1.93 a year ago.
The group revenue for the six months was Rs.36.7 billion, up 10 percent year-on-year (YOY). Trade receivables too rose by Rs.3.8 billion to Rs.17.8 billion.
Group mobile telephony unit, Mobitel Private Limited also narrowed its profits as its before tax profit lost 10.4 percent YOY to Rs.2.2 billion for the 1H16 but recorded revenues of Rs.16.7 billion, up from Rs.14.9 billion during the same period last year.
Mobitel accounts for little over 45 percent for the group based on revenue.
The government in concert with other parties control a 52.73 percent stake in SLT.