Listed companies’ earnings slump 52%
Quarterly earnings of 266 Colombo Stock Exchange listed companies declined 52 per cent during the three months ended March this year according to a report released by an investment banking firm.
According to First Capital the 266 companies posted a earning of Rs 33.6 billion during the quarter under consideration, down 52 per cent compared to Rs 62.79 billion recorded a year earlier.
The same report highlighted the quarterly earnings recorded March quarter was down 50 per cent compared to the previous quarter ended December 2019.
During the quarter ended March this year 93 companies extended loses while 173 companies posted gains in earnings.
The biggest contributor to the loss were Diversified Financials (-87 per cent year-on-year), Capital Goods (-63 per cent year-on-year), Food, Beverage & Tobacco (-72 per cent year-on-year), Telecommunication (-52 per cent year-on-year) and Consumer Services (-101 per cent year-on-year).
However, upbeat quarterly performance were witnessed in the Banks (+32 per cent year-on-year) followed by Food, Staples, and Retailing (+96 per cent year-on-year) and Materials (+8 per cent year-on-year).
“Lackluster performance in Diversified Financials, Capital Goods and Food, Beverage and Tobacco sectors was mainly owing to subdued economic growth which was heightened by the pandemic COVID-19 striking the island,” Fitch Ratings said.
“PLC profit dipped by 90 per cent year-on-year due to high impairments because of the slowdown in the economy caused a reduction in disposable income of customers and business volumes,” it said.
“Consequently, there was a rise in non-performing loans in the sector which was the main factor for the decline in earnings of COCR (-56 per cent year-on-year), LOFC (-29 per cent year-on-year), LFIN (-19 per cent year-on-year) as well.
“Therefore, primarily led by the above-mentioned counters, the Diversified Financial sector recorded a decline of 87 per cent year-on-year,” it said.
“Plunge in earnings by 63 per cent year-on-year in Capital Goods was chiefly driven by SHL earnings reporting a loss of RS 3.3 billion (-11033 per cent year-on-year) followed by the decline in earnings in BRWN (-53 per cent year-on-year) and SPEN (-45 per cent year-on-year),” it said.
“Notably, JKH recorded a growth of 18 per cent year-on-year primarily due to the growth in profits in Consumer Foods, Retail and Property segments, overall, the Capital Goods sector recorded a decline in earnings” it said.
On the positive side, “Banking sector witnessed a profit growth of 32 per cent year-on-year to record RS 14.6 billion primarily driven by COMB (+20 per cent year-on-year), HNB (+57 per cent year-on-year) and SAMP (+27 per cent year-on-year). COMB, HNB and SAMP profits were boosted due to financial investment gains (forex and mark to market gains) coupled with the removal of NBT and Debt Repayment Levy which improved the bottom line,” it said.
“CARG recorded an impressive growth of 134 per cent year-on-year driven by the growth in FMCG and retail space, benefitting the Food, Staples and Retailing sector to record a growth of 96 per cent year-on-year,” it said.