Corporate

SriLankan: losses decline, moves towards profitability

SriLankan Airlines significantly reduced its loss in the last financial year and will shortly launch wide-ranging expansion projects to transform the national carrier and drive growth in Sri Lanka’s tourism industry.

The airline announced extensive plans to expand its fleet of aircraft and global route network, upgrade passenger comfort on-board, and further diversify into related areas of activity, at its 31st anniversary celebrations in Katunayake.

Chairman Nishantha Wickremasinghe told shareholders in SriLankan’s latest Annual Report “SriLankan Airlines has withstood the most unrelenting period of adversity during its 30-year history, and now stands on the verge of success in no uncertain terms.

Your company successfully weathered a period of great turbulence during the last financial year, and now has its sights set firmly on expansion in all sectors of its business, with the broad objective being a return to profitability within the shortest possible time.”

The SriLankan Airlines Group slashed its loss by almost Rs. 4 billion in the financial year 2009/10, recording a Net Loss of Rs. 6.03 billion in comparison to Rs. 9.99 billion in the previous year. The Group comprises SriLankan Airlines Ltd. and its subsidiary SriLankan Catering (Pvt) Ltd.

The positive result was mainly due to a significant reduction in operating expenditure from Rs. 84.40 billion down to Rs. 69.28 billion.

Unit Cost improved sharply to Rs. 43.37 per tonne kilometre from Rs. 50.71 per tonne kilometre. Passenger Load Factor improved significantly to 77.93percent from the previous year’s 72.85 percent, while Overall Load Factor also increased to 66.72 percent versus the previous 65.12 percent.

CEO SriLankan Airlines Manoj Gunawardena said “SriLankan Airlines once again emerged stronger than ever from a turbulent year, and is now perfectly placed to drive the impending boom in the country’s tourism industry, contribute to the entire national economy, and move closer towards achieving profitability.”

“The Company’s emphasis on the principles of its Business Turnaround Plan resulted in a continuous improvement of its financial performance as the year progressed.

The loss incurred during the second half of the financial year was 44 percent lower than that of the first half. All major contributing cost factors were significantly reduced-Fuel by 35 percent, Aircraft Maintenance by 19 percent, Catering by 3 percent, Landing Costs by 13 percent, Airport Handling by 7 percent, and Overflying by 16 percent. All major Fixed Costs were also reduced, including Aircraft Related Costs by 4 percent,” said SriLankan’s CEO.

Revenue for the year was Rs. 63.36 billion, a reduction from the revenue of Rs. 74.26 billion for the previous year, mainly on account of reduced operations and the removal of the fuel surcharge on air tickets.

Wickremasinghe noted: “SriLankan Airlines continued to be in the forefront of major institutions in supporting the Government of Sri Lanka in its drive towards national development.

The national carrier in particular worked in partnership with the Sri Lanka Tourism Promotions Bureau and the nation’s hospitality industry in enhancing Sri Lanka’s image and positioning the island as a destination of choice for global travellers. According to statistics of the Sri Lanka Tourism Development Authority, SriLankan brought in approximately half of the tourists who visited the island during the financial year under review, three times as many as the second placed airline.”

SriLankan also won a number of international awards including Airline of the Year at Sri Lanka’s Presidential Awards for Travel & Tourism, Best Airline Operator (South Asia) at the Kuala Lumpur International Airport Awards, and Best Passenger Airline by Growth in South Asia at Singapore’s Changi Airport Awards.

The Airline continued to modernize and expand its fleet and took delivery of one Airbus A320 aircraft in July 2009. A wide-body A330-200 was acquired in the second quarter of 2010. Services were launched to Milan during the year under review, and to Shanghai during the current year.

SriLankan Engineering enhanced its position as a maintenance-repair-overhaul institution in the region with major contracts from GoAir and IndiGo, while SriLankan Cargo doubled its handling capacity at BIA.

The Airline’s Ground Handling operation continued to support the expansion of BIA which is fast becoming a modern, sophisticated air terminus. SriLankan also signed an MOU with SIM Industries BV of the Netherlands to set up a Full Flight Simulator at BIA.

The subsidiary SriLankan Catering (Pvt) Ltd. signed agreements during the year under review to provide catering services to several more airlines which operate to BIA, and invested in several projects to diversify its services. It also added ISO 14001:2004 certification for Best Environmental Practices, and ISO 9001:2008 for Quality Management Systems, in addition to ISO 22000:2005 for Food Safety Management Systems, and HACCP-Codex Alimentarius for Food Safety and Hygiene.

Goh Choon Phong next CEO SIA

The Board of Directors of Singapore Airlines has said that Goh Choon Phong will succeed Chew Choon Seng as CEO when Chew retires at the end of December 2010.

Goh, age 47, joined SIA in 1990, after graduation from the Massachusetts Institute of Technology with a Master’s degree in Electrical Engineering and Computer Science as well as three Bachelor degrees, in Computer Science and Engineering, Management Science and Cognitive Science.

He has served in senior management positions in Singapore as well as overseas, and is currently Executive Vice President for Marketing and the Regions, having been appointed to the post earlier this year after four years as President of Singapore Airlines Cargo.

He is also presently Chairman of SilkAir.

Renuka Holdings posts Rs. 1.5 b turnover in 2009/2010

Renuka Holdings PLC has recorded a noteworthy turnover and operating profit growth for the financial year ending 2009/2010 as per its Annual Report.

This was the first complete year of operation since the acquisition of subsidiaries in March 2009 transforming Renuka Holdings from an investment trust to a diversified holding company. Turnover for the period reviewed grew to Rs. 1.5 billion, while total assets of the group increased to Rs. 2.8 billion as of March 31, 2010.

In the corresponding financial year the Group recorded a profit of Rs. 443 million due to an exceptional gain of Rs 448 million on negative goodwill on acquisition of subsidiaries. Earnings per share were Rs. 5.04 for the twelve months of 2009/2010 which was after the five-for-one share split which the company undertook in the period.

On a segmental basis the Agri-Business Sector posted a profit of Rs. 230 million and the Investment and Service Sector Rs. 157 million. The company has listed subsidiaries, Coco Lanka PLC which is an Investment Trust and Renuka Agri Foods PLC which is in the Food & Beverage sector. The Renuka Group has recently announced that it planned to enter the Property Development and Leisure sectors utilising its land bank.

Chairperson Mrs. I.R.Rajiyah in her Annual Review noted, “In line with the group’s direction, Agri Business will remain a key focus area for the organisation.

Our subsidiaries engaged in coconut products, ethnic foods, organic foods and beverages and tea, have successfully increased their global reach, while seeking opportunities for further value addition within these areas.

The organisation has also embarked on an Enterprise Resource Planning system coupled with lean management techniques to eliminate inefficiency in the value chain.

These initiatives will ensure that the group retains its competitive position and improves profitability in the future”.

“The Group has an un-utilised land blank of 1.6 acres of freehold property in Central Colombo and 23 acres of tourism related real estate in the Eastern and Northern Provinces.

The Group has been exploring various possibilities for the development of these lands, carried out feasibility studies, and had discussions with potential partners.

Projects are expected to materialise in the forthcoming financial year. We have also completed planting our forestry site with teak and mahogany and are in the process of purchasing more suitable land to expand our activities”, she added.

Renuka Holdings traces its origin to 1866 and was listed on the Colombo Stock Exchange in 2008.

The Group is engaged in plantations, manufacturing and exporting of Ceylon Tea, coconut products, ethnic and organic food as well as in forestry, logistics and portfolio management.

HSBC chairman to become Minister of State for Trade and Investment, UK

Stephen Green will step down as Chairman of HSBC Holdings to accept the invitation of the Prime Minister of UK to become Minister of State for Trade and Investment in January. Stephen Green joined HSBC in 1982 and became an Executive Director in 1998. He served as Group Chief Executive from 2003 to 2006 before his appointment as Group Chairman.

LMF Rights Issue oversubscribed

The Company Secretary of Lanka Milk Foods (CWE) PLC, Chrisanthie Hewage, said that the Rights Issue which ended on September 2, 2010 was oversubscribed.

The success of the rights issue is a strong vote of confidence by the investing community in the company and the policies adopted. The Rights Issue attracted substantial interest from shareholders, institutional and retail segments, both domestic and foreign.The Chairman and Board of Directors thank the shareholders for the trust and confidence placed in the company. LMF which has always upheld the highest standards of corporate governance, and professionalism in management, will continue to take the company to new heights and continue to set the pace for the dairy industry in Sri Lanka.