After four quarters of negative earnings growth, the total earnings of companies listed on the Colombo Stock Exchange recorded a 90% growth rate in the December 2023 quarter, data compiled by First Capital Research showed.

Listed company earnings amounted to Rs184 billion in the December 2023 quarter, up from Rs97 billion a year earlier and a 31% increase from the September 2023 quarter.

“This resurgence was fuelled by improved economic sentiment,” First Capital said and can be primarily attributed to the following factors: Food, Beverage and Tobacco earnings increased by over 95% due to the reduction in overall finance costs and operating expenditure coupled with improved consumer buying patterns; diversified finance company earnings total grew by over 128% on declining interest rates; the Capital Goods sector saw earnings grow by over 480% helped by declining inflation, improved cost structures and higher tourist arrivals.

Banking, energy, and transportation stocks weighed down the earnings gain. Energy sector earnings fell 78% on increased selling and distribution expenses. The transportation sector declined by over 272% due to rising trade protectionism, high energy prices and falling demand impacted by depressed freight rates, uncertainty and curtailed consumer spending. 

Banking sector cumulative earnings fell nearly 20% on declining interest rate spreads and tax reversals offsetting earnings despite reducing impairment provisioning, First Capital said.