Strong quarter underscores JKH's strength and strategic momentum

In the wake of John Keells Holdings' strong Q2 2025/26 results, we joined two leading market analysts—Asia Securities Head of Equity Research Niroshan De Silva and CT Smith Securities Senior Research Analyst Sachintha Siriwardena as they discussed the Group's major projects such as City of Dreams Sri Lanka, diverse segment dynamics, balance sheet strength, market sentiment, and why the latest financials should boost investor confidence in the conglomerate’s medium-term trajectory.

- 

How would you characterise JKH's Q2 performance against the broader economic backdrop?

Niroshan: The macro environment has clearly stabilised, with inflation around 5%, a steadier currency and interest rates in the high single digits. Tourism has exceeded 1.97 million arrivals, growing double digits, and remittances remain strong. This has supported consumption, with Supermarkets and Consumer Foods seeing low to mid-teens growth in volumes and same store sales.

In this environment, JKH reported an 88% rise in revenue to Rs. 144.8 billion in Q2. The New Energy Vehicle business (JKCG/BYD) handed over about 3,700 units and has more than 3,800 orders in the pipeline. EBITDA more than doubled to Rs. 18.4 billion, with PBT up 243% and PAT up 176%. Leisure moved from a loss to an EBITDA profit, and City of Dreams Sri Lanka, though still in its launch phase, was already close to EBITDA breakeven. The Group's broader confidence in its strategy and cash generation ability was also reflected in the doubling of its first interim dividend to Rs. 0.10 per share; a Rs. 1.8-billion payout.

Sachintha: Performance was broadly in line with expectations, but particularly strong where structural tailwinds exist. Retail remained a standout, led by BYD, though the customs dispute and broader policy headwinds around EV imports remain near term challenges. Nations Trust Bank delivered another strong quarter as well, supporting Financial Services.

Transportation posted solid volume growth but margins were affected by an unfavourable cargo mix, even as CWIT scaled faster than expected and SAGT benefitted from higher throughput at the Port of Colombo. City of Dreams Sri Lanka was almost at EBITDA breakeven. Despite finance costs from newly operational components, gearing remains comfortable and the core businesses continue to generate strong cash flows.

What are the key indicators that demonstrate the Group's underlying resilience?