Sri Lanka’s listed corporates post best earnings ever of Rs. 85 billion in last quarter of 2020
Listed corporates combined in Sri Lanka have reportedly posted their best earnings ever of Rs. 85 billion in the quarter ended on 31 December 2020, setting a new record despite COVID-19 linked challenges, local media report stated.
Softlogic Stockbrokers, which analysed the earnings, has reportedly stated that the combined figure reflected a 33.3% increase year-on-year (YoY) and it was the best ever in the Colombo Stock Exchange (CSE).
“The 33.3% YoY growth was a strong sign of the earnings momentum continuing beyond the pent-up demand cycle expected in 3Q 2020, as the QoQ earnings grew 16% for Q4 2020,” Softlogic Stockbrokers said. “The growth is in testament to the favourable climate for local companies during the post-lockdown period backed by import protectionism, economic stimulus and USD depreciation, which proved to benefit local industries and export segments,” Softlogic Stockbrokers has been quoted as saying in the Daily FT.
Softlogic has stated that the exceptional performance was achieved despite the continuation of localised lockdowns during the period from October to December and lower levels of mobility as the country faced the second wave of COVID-19.
It has further stated that the 33% earnings spike was despite a Rs. 6 billion loss from companies listed under Consumer Services.
Earnings spanning four quarters had amounted to Rs. 212.4 billion marginally up by 0.5% from a year earlier.
The banking sector earnings had grown 42% QoQ in 4Q’20 amidst higher impairment provisioning and margin contraction, cumulative trailing 12-months (TTM) earnings marginally down at -6% YoY, the Daily FT has reported.
Capital Goods sector earnings had increased 66% YoY in 4Q’20 and up by 62% QoQ basis, on the back of import protectionism, USD depreciation and revival in activity levels, despite the dip of JKH.
Food Beverage and Tobacco earnings had marginally declined by 3% QoQ basis, holding due to inelastic nature of products despite lower consumer spending, whilst the palm oil price-spike drove earnings up by 75% YoY in 4Q’20.
Health Care Equipment and Services sector earnings had improved significantly by 105% YoY and 68% QoQ due to the surge in demand in the healthcare sector.
The materials sector earnings had improved significantly (147% YoY) remaining broadly around the 3Q earnings mark (-7% QoQ) to record a growth of over 100% on a TTM Basis.
According to the report, the retailing sector had witnessed a phenomenal growth in earnings by 401% YoY (-42% QoQ) driven by the strong pent-up demand which continued to be seen in 4Q despite reaching its peak in 3Q 2020.
Telecommunication sector earnings have increased 21% YoY in 4Q’20 on the back of improved data consumption, cost savings initiatives and reduced operational expenses.
Transportation sector earnings have also increased 1,930% YoY to Rs. 4.6 billion on the back of the extraordinary earnings boost witnessed by EXPO during the prolonged travel restrictions, and the resulting spike in air freight rates.
The Utilities Sector earnings have grown 19% QoQ in 4Q’20 as favourable weather conditions resulted in a strong growth of power generation, leading to a marginal growth of 1% YoY in line with its seasonality.
Also, Power Sector earnings have grown 1,018% YoY and 103% QoQ in 4Q’20 due to a strong turnaround by Laugfs Gas compounded by the improved profitability of LIOC.
OSL take:
The above news report is indicative of the strength and growth of Sri Lanka’s private sector as well as the overall economy. Sri Lanka’s economy has shown great resilience through the years and is already showing strong signs of returning to normalcy after facing the impact of the global Covid 19 pandemic. The island is once again on the path to becoming a business hub in the South Asian region given its 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 confidently explore business/investment opportunities in Sri Lanka.
| Article Code : | VBS/AR/20210318/Z_2 |