Corporate

Sampath’s performance impressive

Sampath Bank has recorded yet another impressive First quarter 2009, Post Tax Profit Up by 20.4 percent.

Samapth Bank continued its performance well in first quarter 2009, despite the unfavourable conditions that prevailed in the economy. Pre-Tax Profit of the Bank, amounted to Rs. 698.174 Million for the first quarter 2009, as against Rs. 603.744 Million for the same period previous year.

This amounted to a pre-tax profit growth of Rs. 94.4 Million or 15.6 percent, as against the negative growth of 24.8 percent recorded in 2008. Post Tax Profit of the Bank for the first quarter 2009 amounted to Rs. 363.79 Million, as compared to Rs. 302.113 Million for 2008, which reflected a significant growth of Rs. 61.677 Million or 20.4 percent, as against the negative growth of 21.2 percent in the first quarter 2008.

Pre tax profit

Pre Tax Profit of the Sampath Group, which consists of the Bank, its 6 subsidiaries and an overseas Associate Company rose to Rs. 748.95 Million in first quarter 2009, from Rs. 662.438 Million in same period 2008, recording a growth of Rs. 86.512 Million or 13.1 percent, as against the negative growth of 26 percent in first quarter 2008. Post Tax Profit of the Group was Rs. 397.423 Million in the first quarter 2009, as against Rs. 325.393 Million in the same period in 2008. This amounted to a Post Tax Profit growth of Rs. 72.03 Million or 22.1 percent for the Group as against the negative growth of 24.2 percent in the first quarter 2008. Increase in income, both net interest income and other income contributed primarily to this impressive bottom line growth, which surpassed its moderate asset growth of 0.4 percent, during the first quarter 2009. This was mainly due to a series of performance improvement initiatives taken by the Bank.

Net interest income

Net interest income, the principal source of income rose from Rs. 1.373 Billion in 2008, to Rs. 1.742 Billion in the first quarter 2009, recording a growth of Rs. 367.8 Million or 26.8 percent. This was partially facilitated by the growth in the bank’s fund base during the period from 31.03.08 to 31.03.09. In addition, the Bank continued to improve its net interest margin, despite the volatile market conditions. Consequently, net interest margin rose to 5.07 percent during first quarter 2009 as against 4.15 percent during same period 2008.

This was facilitated by several external and internal factors. The reduction in the Statutory Reserve on rupee deposits from 10.0 percent to 7 percent in the 4th quarter of 2008 was the main external contributory factor for this improvement.

However, the interest impact of this factor in the first quarter 2009 is estimated to be around Rs. 105.0 Million. Hence, internal contributory factors, such as judicial fund management measures taken by the Bank via its Assets and Liabilities Management Committee (ALCO), timely pricing and re-pricing of products in a volatile market, coupled with timely channeling and re-channeling of funds to more remunerative areas etc. have played a major role in improving the net interest margin of the Bank.

DPL posts Rs. 616m pre-tax profit

Dipped Products PLC (DPL) has ended 2008-09, a year it describes as `highly uncertain’ in terms of the business environment that prevailed, with a profit performance that matched that of the previous financial year, a result the company says is satisfactory in the context of the conditions under which it was achieved.

In results released to the Colombo Stock Exchange this week, the Hayleys Group’s multinational rubber gloves business, its subsidiaries and associates have reported consolidated Group profit before tax of Rs 616 million, the same figure recorded for 2007-08, on a Group turnover of Rs 11.9 billion, an improvement of 7 percent.

A strong final quarter enabled the Group, which also has a significant interest in plantations, to generate a profit of Rs 302 million from local manufacturing operations, a growth of 14 per cent. “The turnaround of Dipped Products (Thailand) Limited stands out as the most noteworthy development of the year. Though the company ended the period under review with a net loss, its performance particularly since August 2008 has been encouraging. The operations reached breakeven point in the last quarter of the year and have now completed the first quarter of the current year as at end March 2009 with a significant net profit,” DPL Managing Director J. A. G. Anandarajah said.

glove manufacturing

The Group’s profit attributable to shareholders declined by Rs 8 million or 2 percent over 2007-08.

In the Hand Protection segment, turnover grew by 7 percent to Rs 9,463 million in the year under review. Turnover from glove manufacturing increased by 5 percent to Rs 6,896 million largely as a result of revenue from the medical glove business in Thailand growing by 28 per cent to Rs 1, 367 million. DPL’s Sri Lankan glove manufacturing operations posted a revenue growth of just 1 percent. Sales of ICOGUANTI S.p.A., the Group’s Italian marketing company grew 12 per cent to Rs 3,036 million from Rs 2,710 million. Meanwhile, DPL’s plantation company Kelani Valley Plantations PLC (KVPL) and its subsidiaries posted a turnover of Rs. 3,109 million, a growth of 10 percent, with revenue from tea increasing by 13.6 percent, and from rubber by 2.9 percent. However, KVPL’s pre-tax profit declined by 31 percent to Rs. 300 million following the collapse of the commodity markets in the last quarter of the year. Production volumes of tea increased by 10 percent, but heavy rainfall in the first half of the year disrupted harvesting of rubber, depressing crops by 6.8 per cent.

tax-exempt dividend

Based on these results, the Board of Directors of DPL PLC has proposed a tax-exempt dividend of Rs. 3 per share.

Kelani Valley Plantations PLC has already paid a dividend of Rs. 3.50 per share for the year ending December 2008. Among the most serious adverse factors affecting performance in the Hand Protection segment of DPL was the escalating cost of production. “The meteoric rise in oil prices and the consequent escalation in cost of rubber and all other inputs during the first half of the year exerted an unprecedented degree of pressure on the performance of this sector,” Anandarajah said. “In spite of the unusually large upward price adjustments agreed with customers, a substantial portion of the extra cost had to be still absorbed over and above similar cost absorptions in the previous year.” Additionally, the finance overhead in Sri Lanka rose by 10 percent, and high interest rates also affected the cost of funds. The Sri Lankan rupee depreciated by only 6.8 percent during the period, out of sync with local inflation that reached alarming levels by mid year and annulled the recoupment of local cost increases, Anandarajah disclosed.