While the performance of John Keells Group initially witnessed strong momentum in the fourth quarter of the financial year 2019/20, the outbreak of the COVID-19 pandemic, globally, and then locally in March 2020 onwards, had varying levels of impact on the performance of the businesses.
The Group’s Bunkering business recorded a strong growth in profits driven by improved margins.
South Asia Gateway Terminal (SAGT), the Group’s Ports and Shipping business, became liable for corporate income tax from October 2019 onwards, which, therefore, had a negative impact on performance said Chairman, Krishan Balendra.
The Beverages and Frozen Confectionery businesses recorded an improvement in performance driven by an expansion of margins due to a better sales mix. Both businesses recorded encouraging volume growth in the months of January and February, where volumes grew approximately 20 - 30 per cent, on average. However, the imposition of island-wide curfew due to the COVID-19 pandemic caused disruptions in sales in the last 2 weeks of March 2020, which is a peak sales month, resulting in a steep decline in volumes.
The Supermarket business recorded a strong performance driven by a notable contribution from new outlets and growth in same store sales. Same store sales recorded an encouraging growth of 5.7 per cent in January and February 2020. However, similar to the impacts in the Consumer Foods businesses, a steep decline in same store sales was recorded in March due to the imposition of curfew.
The Group’s Sri Lankan Leisure business displayed a faster than expected recovery post the Easter Sunday attacks, with occupancy in the peak season in line with the previous year, albeit at a moderately lower room rate.
However, the momentum of this recovery was derailed by the developments surrounding the global spread of COVID-19 where arrivals to Sri Lanka were impacted gradually from February 2020 onwards. In addition, the quarter under review included the start-up costs relating to the newly launched ‘Cinnamon Bentota Beach’.
The ‘Tri-Zen’ residential development project continued its encouraging sales momentum, recording sales of 19 units during the months of January and February, although sales in March was impacted by the effects of the pandemic.
Nations Trust Bank recorded a strong improvement in profits driven by the removal of the Debt Repayment Levy and NBT on financial services.
Profitability of Union Assurance PLC during the quarter was impacted by a notional tax credit reversal under investment income.
“Whilst the impact on the financial year 2020/21 cannot be ascertained at this point of time given the uncertain and evolving situation, the Group expects the impact on performance in the first and second quarter to be material, particularly for the tourism focused businesses,” Chairman said.
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