COLOMBO: Sri Lanka’s Laugfs Gas said September 2016 group net profit fell 51 percent to Rs269 million from a year ago as finance costs rose sharply, with the group borrowing heavily to fund investments.
Sales rose 56 percent to Rs4.3 billion during the period, according to interim results filed with the stock exchange.
Finance costs rose 312 percent to Rs320 million, accounts showed. Earnings per share for the September 2016 quarter were 70 cents.
EPS for the six months to September 2016 were 76 cents, down 66 percent from the year before, although sales went up 51percent to Rs8.2 billion. Laugfs Gas group hotels losses widened, while its energy, and transportation and logistics business profits rose.
“Our long-term investments have weighed in on the bottomline of the company,” Laugfs Group Chairman and Chief Executive W. K. H. Wegapitiya said.
“With the commercialisation of the (investment) projects and specially with the renewable energy investment being on the verge of commencing operations, this momentary dip in profitability will be reversed with much more potential for future growth.”
The group is investing in the energy and related sectors of the economy and has “charted for itself a growth trajectory encompassing several sectors that show enormous potential in the economy,” Wegapitiya said.
“We have moved fast to claim a stake in such sectors with a long-term view for growth, while acknowledging that we will have to bear a short-term dip in profitability.”
Laugfs Gas group’s investment on a 20MW solar power plant at Hambantota is progressing according to plan and is expected to generate significant revenue in the fourth quarter of the current financial year,” Wegapitiya said.
It also expects to commission the port-based LP Gas import and export terminal being built at Hambantota Port in the fourth quarter of the next financial year.
“This will generate significant foreign exchange revenue for the country by being able to satisfy the LPG requirements of the country, as well as being able to export the excess capacity,” Wegapitiya said.
“Our investment in Bangladesh’s downstream LPG business is showing promising results and exceptional growth prospects.
“Our investment into the leisure sector is also showing promising results as both hotels (Chillaw and Paasikuda) have now commenced commercial operations.”
