BPPL Holdings of Sri Lanka’s April-June 2022 net earnings up 188% YoY. - Opportunity Sri Lanka
BPPL Holdings of Sri Lanka’s April-June 2022 net earnings up 188% YoY.

BPPL Holdings of Sri Lanka’s April-June 2022 net earnings up 188% YoY.

The Morning: BPPL Holdings has announced its unaudited financial results for the three-month period April to June 2022, in which its net earnings for the quarter were recorded at Rs. 300 million, or Rs. 0.98 per share, up by 188% compared to the corresponding period in the previous year, where the net earnings were Rs. 104 million or Rs. 0.34 per share. Year-on-year (YoY) revenue growth was recorded at 58% in rupee terms, amounting to Rs. 1.6 billion. The net earnings increase for the period was due to a combination of the increase in revenue and gross profit margins, the firm stated. Gross profit margins improved to 39% during the period from 29% in the same period the previous year due to product price increases in January 2022, recommencement of local sourcing of both timber and PET bottles following the lifting of Covid-related travel restrictions earlier this year, and the effects of steep Sri Lankan rupee (LKR) depreciation in March 2022.

Group distribution costs largely relating to freight, shipping, and related costs, though a higher 8.3% of revenue during the period, against 7.6% during the corresponding period in the previous year, have now started to come down in line with falling global freight rates. Other income continued to grow as was also seen in the January-March 2022 period by 327% to Rs. 11 million following the commissioning of several solar power generation plants earlier this year, where solar capacity increased to 2.2 MW from 347 KW. Exchange gains of Rs. 67 million were recorded during the quarter, as the Sri Lankan rupee continued to depreciate in the months of April and May.

Depreciation charges increased by 39% with the completion of Phase 2 of the Yarn expansion programme during the January-March 2022 quarter. Finance costs grew fourfold following the Phase 2 expansion, interest on term loans taken for the solar projects, higher working capital needs due to significant delays in shipment arrival (to Sri Lanka) and transit times, and US dollar interest rate increases. BPPL Holdings Managing Director/CEO Dr. Anush Amarasinghe stated: “I’m pleased to say that our staff worked tirelessly to overcome a very challenging operating environment due to limited fuel supplies and electricity cuts during the reported period. Electricity supply for continuous operations was barely managed with the help of fuel supplies from private sector operators, who had to be paid in hard currency. “We also provided fuel where possible to some key raw material suppliers for them to carry on their work. However, some secondary suppliers were affected by the fuel crisis. We are making steady progress with obtaining the necessary regulatory approvals for the pending $ 15 million, 10-year term loan from the US Development Finance Corporation. Disbursement of funds are expected to commence later this year and will be obtained in three tranches over a four year period.”

OSL take:

The performance of BPPL Holdings is yet another indication of the strength and growth of the country’s private sector. Despite facing internal and external challenges during the past few years due to the global pandemic and its ensuing challenges, Sri Lanka’s economy has shown great resilience and is on the path to recovery. Sri Lanka’s economic recovery have been further supported by the country’s geographical positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed by the country. The ongoing economic activities have opened up many business/investment opportunities covering all key economic sectors in the country. Given the growth and business potential in the country, foreign businesses/investors could explore the growing opportunities in Sri Lanka. 

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Article Code : VBS/AT/03082022/X_4

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