Fitch affirms John Keells Holdings at 'AAA(sri)'

RATING: Fitch Ratings Lanka Limited affirmed John Keells Holdings Limited's ("JKH") long-term national rating of 'AAA(sri)'.

The rating outlook is stable.

'AAA(sri)' credit ratings denote the lowest expectation of credit risk. This rating is assigned only in case of exceptionally strong capacity for timely payment of financial commitments.

This capacity is highly unlikely to be adversely affected by foreseeable events.

The affirmation of the rating reflects JKH's dominant market position in a number of operating segments, its robust cash generative earnings, track record of the management team, its diversified nature and strong financial profile.

From a ratings perspective, the group's partly acquisitive growth strategy is balanced by the management's relatively conservative financial strategy. Although the group's tourism related operations were severely affected following the tsunami, its other operating segments have cushioned the effects of this.

The Transport segment that includes bunkering and port terminal handling operations have emerged as the largest contributor to the group's earnings and continues to generate robust cash flows. JKH is in the process of consolidating its position in the up-market tourism industry to which end the group is making heavy investments.

The agency expects the property development operations of the group to increasingly contribute towards earnings and cash flow generation in the future and also notes that the group is making some progress in reducing expenditure and restructuring activity in some of the under performing operations.