JKH sees rise in discretionary spending and global gaming operators eye Cinnamon Life
John Keells Holdings (JKH) have seen considerable increases in consumer confidence with discretionary spending on their frozen foods, confectionery, and soft drinks segments seeing considerable increases in volumes.
JKH Deputy Chairperson Gihan Cooray in detailing the results noted that on a comparative basis, the decline year on year was only 3 per cent compared to 20 per cent and 40 per cent in the preceding two quarters respectively. Cooray said, “Right now in the three weeks or so of July we’ve also seen that same momentum continuing. There is a shift we are seeing on the macro front.”
Cooray added, “With interest rates coming down with the DDO a lot more certainty and the exchange rate also appreciating so there’s a better confidence that’s coming through and you’re starting to see that translate into this sort of consumption.”
Cooray was speaking on July 29 at the investor conference for JKH following the release of Quarter 1 results.
In Q1 2023/24, Group PBT was Rs. 1.40 billion, a decrease from Rs. 14.80 billion in the previous year. JKH Chairperson Krishan Balendra noted that forward bookings in the leisure sector indicated that December 2023 would be in line with December 2018 figures. Balendra said, “Room rates may be a little lower but it is encouraging that we are seeing this kind of recovery.”
Even travel figures by locals frequenting the hotels have picked up. Balendra said, “Domestic occupancy picks up quite strongly and over the next few months that domestic segment will contribute more.”
He noted that it wouldn’t take as large a proportion of guest nights as in the past as room rates have increased compared to the closure of the airport.
Balendra expected inflation to come down further. He said, “It is coming down rapidly and is expected to come down further.”
Balendra praised the return to normalcy. He said, “We are continuing to see normal day-to-day activity uh for the population across the country as well as for business quite a change from what we had about a year back.”
The Supermarket business had a robust quarter with strong revenue performance, especially in April. Same-store sales grew by 23%, driven by a 15% increase in customer footfall. This revenue growth is anticipated to improve EBITDA, aided by productivity and cost-efficiency initiatives.
On the gaming regulations, Balendra said, “The regulations that were gazetted in September last year and passed in Parliament in December last year are adequate for most of the leading operators that we have engaged with.” (TP)