John Keells Holdings (JKH) experienced a challenging first quarter in FY 2024 (ending June 30, 2023), with a significant drop in profitability – group net earnings fell 87% – across most business sectors due to a higher comparative base from a year earlier.
Financial Services was the only sector showing notable growth, with an increase of 93.9% YoY in net profits, First Capital Research said in a recent report. The Financial Services sector stands out with encouraging year-on-year net profit and EBITDA growth, indicating that targeted lending strategies and rising interest rates have paid off for the segment.
First Capital notes that while JKH faces short-term challenges, its focus on long-term projects and the resilience shown in some sectors are causes for cautious optimism and future profitability hinges on the recovery of disposable incomes and improving operating environment.
The higher base from last year and turbulent market conditions have dampened JKH’s performance across almost all sectors except Financial Services, with higher operating costs, declining disposable incomes, and unfavourable currency exchange rates contributing factors.
Despite the disappointing performance, there are signs of recovery in the Consumer and Retail sectors on a QoQ basis, mainly attributed to the recovering volumes across all business sectors.
On a positive note, First Capital points to JKH’s commitment to some capital-intensive projects. The groundwork for the Port of Colombo WCT terminal is progressing well, with completion expected by 3QFY26, it said. The Property sector, showing marginal profits in the quarter, would improve as the economy recovers, with the unsold number of apartment units at 38% for Cinnamon Life and 26% for TRI-ZEN.
