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| Sunday, 8 June 2003 |
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Business |  |
| News Business Features Editorial
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JKH profits grow to record level Amidst an improving economic backdrop, the consolidated net profits of John Keells Holdings grew by 143.6 per cent to Rs. 1.3 billion, a record level. Strong contributions to profit growth were witnessed from virtually all sectors during the past year, while the group's successful bid for Lanka Marine Services in August 2002 added another feather to its cap. Pre-tax Return on Capital Employed improved to 14.4 per cent from 9.2 per cent last year, while Return on Equity increased to 14.6 per cent from 6.7 per cent. Total Shareholder Return, comprising dividends and capital appreciation, was 25 per cent for the financial year, Chairman JKH V. Lintotawela said in the annual report for 2002/03. Peace negotiations between the Government and the LTTE have already contributed significantly towards healing the economic woes of the recent past. Economic growth rebounded to four per cent in 2002, defence spending has fallen, interest rates have eased and tourist arrivals have risen. These are merely a few glimpses of what peace could offer. "Given our presence in the key growth sectors of the local economy, we are ideally poised to reap the benefits of an economic resurgence. Our leisure sector is well positioned, with a number of resorts in strategic locations. "We are present in virtually all facets of international transportation, and the sector will undoubtedly be a key beneficiary of the likely pick-up in trade activity and business confidence. "Moreover, owning two of the best-known food and beverage brands in the country, the pick-up in consumer demand has a natural positive impact on our bottomline while our presence in the country's financial services sector also continues to grow", he said. The company, during the year under review, attempted to skew its portfolio towards the less cyclical areas of the economy. Despite many conglomerates resorting to focus strategies, diversification will remain the JKH formula for generating superior shareholder returns. "We believe our strength lies in identifying under-performing acquisition targets and converting these into significant value creators. We also recognise that active portfolio management is the key to successful diversification. Notwithstanding the record profits earned this year, we mandated the Boston Consulting Group to help institutionalise portfolio evaluation and improve our internal operating model", Lintotawela said. JKH perceives good corporate governance as being integral in building credibility and trust with all stakeholders and reducing cost of capital. It also recognises that the well-being of the community and the broader environs in which it operates are inexorably linked with the fortunes of its corporate existence. |
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| Editorial | Security Produced by Lake House |
