Colombo (LNW): Diversified blue chip John Keells Holdings (JKH) yesterday reported impressive growth in revenue and operating profit for the third quarter but profit before tax (PBT) was impacted by much higher interest costs in comparison to a year earlier.
JKH said 3Q witnessed the continuation of normal day-to-day consumer and business activity, supported by continued political and social stability and less disruptions on account of the macroeconomic challenges.
The Group revenue grew in 3Q by 27% to Rs. 68.24 billion and by 47% to Rs.208.82 billion in the first nine months of FY23. Group earnings before interest expense, tax, depreciation and amortization (EBITDA) grew by 9% to Rs.10.41 billion in 3Q.
JKH Chairperson Krishan Balendra m in his review accompanying the 3Q interim results has urged the authorities to expedite the implementation of much needed public sector reforms, including privatization.
He noted that this was done by countries when faced with similar challenges in the past, to address the structural and governance issues of the economy to achieve long-term sustainable growth and emerge from this economic crisis stronger.
He stresses improved productivity, investment in better technology through collaboration and reduction of expenditure to better ensure more competitive and comparable cost of production of energy and other utilities on sustainable manner utilities in a sustainable manner.
“These reforms will also aid the Government in raising revenue through investment while ensuring better collaboration, technology and knowledge transfer in key industries,” he emphasized.
JKH Chief acknowledged that the progress made thus far in implementing the difficult, yet necessary, reforms and initiatives to revive the economy and overcome the worst economic crisis faced by the country is noteworthy and is required for fiscal consolidation.
“Whilst it would understandably curtail consumer spend and activity in the short to medium term, the stability and confidence in achieving fiscal consolidation will lead to a more sustained recovery,” he added.
In his review Balendra also acknowledged the Government’s announcement on several significant policy actions and reforms aimed at achieving fiscal consolidation and reaching sustainable debt levels.
He also noted increases in corporate income tax and indirect tax rates with effect from 1 October 2022, together with upward revisions in personal income tax rates and the reintroduction of withholding tax mechanisms being made effective from 1 January 2023.
He also noted the Government’s announcement of a second revision to electricity tariffs which will further reduce the cost of subsidies to the Government and improve state revenue.
“The full impact of these measures on consumer disposable incomes and spending is yet to be seen.
The measures taken to improve the fiscal position of the Government are necessary at this juncture. However, these increases will impact consumer disposable incomes as well as inflation, including increasing the operating costs of businesses,” Balendra cautioned.
The JKH Chairperson said that while revenue increases through tariff adjustments will boost Government revenue in the short term, the sustainable solution, and need, is to ensure improved productivity, investment in better technology through collaboration and reduction of expenditure to ensure a more competitive and comparable cost of production of energy and other utilities.
