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Monday, 13 September 2010

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In June quarter results:

Listed companies perform well

Six key sectors amount to 81 percent total earnings:

Corporate earnings for the quarter ended June 2010 resound the initial signs of the post war macro economic recovery in Sri Lanka. Acuity Stockbrokers Research analysis of 204 counters or 87 percent of listed entities based on attributable profits indicate a significant turnaround in corporate earnings potential as against the Financial Year 2009 which has been a relatively ‘bad’ year coupled with the escalation of combat against the LTTE, global recession, inflationary pressures and other economic constraints.

Attributable profits of the reported entities for Q2 2010 total to Rs 25.4 billion as against Rs 6.6 billion reported for Q2 2009 indicating a 284 percent growth, Acuity Stockbrokers Research quarterly earnings review said.

Key sectors that have contributed to the quarter’s profits were Banks, Finance and Insurance amounting to 36 percent of total while the Food, Beverage and Tobacco sectors brought in 14 percent and Diversified sector 13 percent. Six key sectors account for 81 percent of the total earnings generated during Q2 2010 i.e. Banks and Finance, F&B, Diversified, Telecom, Manufacturing and Health Services.

The footwear and textile sector has been the only sector reporting losses during Q2 2010 as against Q2 2009 where a cumulative loss of Rs 8.6 billion reported by the Telecom, Hotels and Travels, Power and Energy sector and Motors eroded the profits generated by other sectors weighing down total earnings for the quarter to Rs 6.6 billion. The Banking sector with absolute input of Rs 7.6 billion was the largest contributor to the total quarterly earnings.

The sector reflected a growth of 79 percent on Quarter on Quarter (QoQ) basis.

Diversified Sector earnings have reported a 10 percent growth QoQ to Rs 3.3 billion in Q2 2010 compared to Q2 2009. The diversified sector has been more resilient with sector earnings starting to pick up from Q3 2009 and improving during 2010, review said. The telecommunication sector represented by Dialog and SLT has reported a strong turnaround. The sector contributes 8 percent to market earnings and has potential for earnings growth.

Health sector attributable profits have been ebbing at around Rs 200 million from June 2007 to as late as March 2010 and has seen a dramatic increase, surpassing the Rs 1 billion mark in June 2010. The total contribution from the health sector to market attributable profits was 4 percent.

The food and beverages industry earnings represented around 14 percent of total market’s earnings this quarter which has been on the decline since June 2009 quarter, despite the intra industry attributable earnings rising by as much as 40 percent from June 2009 to June 2010.

The plantation segment has grown by 13 percent QoQ to Rs 914 million in Q2 2010 as compared to 12 percent growth in Q2 2009.

Sector contribution to the total June earnings for 2010 remained at 4 percent. Although the Hotel and Travel industry accounted for less than 1 percent of total market earnings, the sector earnings reflects a phenomenal growth and turnaround recording earnings of Rs 208.6 million as against losses of Rs 483.8 million in June 2009.

City hotels have recorded a cumulative of Rs 284.1 million while losses from resorts although reduced from Rs 529.5 million in Q2 2009 to Rs 75.5 million in 2Q 2010 have eroded sector earnings.

Manufacturing industry contributed 5 percent to total market attributable profits, with an improvement of 101 percent of attributable profits QoQ.

The sector has 30 listed entities. The contribution to total market attributable profits had been highest in June and September ’09 at 10 percent-15 percent, the review said.

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