Sri Lanka’s Expolanka Holdings consolidates Q2 FY24 performance
Ada Derana: Expolanka Holdings PLC have announced its financial performance for the quarter ending 30th September 2023, having successfully navigated through challenging market conditions, demonstrating resilience and adaptability while focusing on long-term strategy.
During the quarter under review, Expolanka Holdings reported a Revenue of Rs. 61.5 billion, with a Gross profit of Rs. 12 billion and a Net loss of Rs. 1.5 billion. For the first half of FY24, the company recorded a revenue of Rs. 117 billion, a Gross profit of Rs. 23.3 billion and a Net loss of Rs. 7.1 billion.
Persistent market challenges continued into the quarter, including high inflation, geopolitical tensions, protectionism, climate concerns and elevated energy costs, causing curtailed demand. The weakening in worldwide commerce due to uncertainty and inflationary pressures dampened consumer and business spending. The economic outlook remained clouded due to the complexity of issues weighing on global growth.
Performance for the quarter was driven by the logistics sector, having recorded a Revenue of Rs. 59.2 billion and a Gross profit of Rs. 11.3 billion. Air and ocean freight volumes declined due to low consumer demand and high retail inventory levels impacting the results. However, Expolanka’s strong customer relationships and network enabled it to maintain market share. The sector delivered a Revenue of Rs. 112.6 billion, a Gross profit of Rs 21.9 billion and a Net loss of Rs. 7.4 billion for the first half of the financial year.
In the period under review, low consumer demand and elevated retail inventory levels have led to reduced retail orders, impacting EFL’s volumes in both Air and Ocean portfolios. While freight capacity improved from its pandemic premium, the increase created excess capacity, causing a sharp decline in freight rates.
However, EFL Global has adapted to the challenging market conditions by maintaining close relationships with existing key accounts and actively pursuing new customers. Despite a decline in volumes due to reduced imports, the company’s strong network presence and customer-centric approach has enabled it to navigate the challenging times.
Expolanka’s strategic focus on enhancing the service portfolio and domestic logistics capabilities have also yielded positive results, with many customers benefiting from the offerings. Recent acquisitions, Trans American Global and the LEI Group, have met expectations, and integration efforts are progressing well.
The leisure sector reported robust growth, with a Revenue of Rs. 838 million, a Gross Profit of Rs. 688 million and Profit after Tax of Rs. 262 million for the quarter. Performance was led by the corporate travel business. Bolstered by the continued success of its corporate travel services, the sector’s inbound and leisure businesses also gained positive traction, allowing the sector to solidify its standing in the market. This resulted in a buoyant first half with the sector, posting a Revenue of Rs. 1.5 billion, a Gross Profit of Rs 1.3 billion and a Profit after tax of Rs. 515 million.
Other investments, which consist of the IT and Fresh produce business units, contributed a Revenue of Rs. 1.4 billion, a Gross Profit of Rs. 46 million for the quarter under review. With the export operations having stabilized and IT-related business making gradual progress, year-to-date Revenue and a Gross profit recorded Rs 2.8 billion and Rs. 59 million, respectively.
Expolanka continued to focus on working capital and cash flow management, supported by efficient working capital management initiatives. Gearing remained low, while a Rs. 6.88 billion dividend was paid during the quarter.
Emphasis remained on the company’s Environmental, Social, and Governance (ESG) initiatives aligned with overall strategic goals. Building on Global Goodness efforts, the company furthered programs supporting UN sustainability aims, green logistics and women’s empowerment.
OSL take:
The performance of Expolanka Holdings is indicative of the strength and growth of Sri Lanka’s private sector despite facing challenging economic conditions. Sri Lanka’s overall economy has shown great resilience through the years to internal and external challenges and is once again back on a growth path after facing the challenges posed by the global pandemic and the economic crisis that followed it. Many private sector businesses have performed well amidst these challenges indicating economic resilience. With Sri Lanka working towards becoming an emerging business destination in the South Asian region, there has been an expansion in business/investment opportunities in the key economic sectors in the country. These opportunities are bound to further expand due to Sri Lanka’s geographical positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed by the country. Foreign businesses/investors could therefore explore the expanding opportunities in Sri Lanka given the growth and business potential in Sri Lanka. Foreign businesses could also look at forming partnerships or joint ventures with local businesses with the aim of further expansion.
| Article Code : | VBS/AT/20231102/Z_3 |