Sri Lankan companies to lose 161.6 mln USD due to COVID-19: Fitch Ratings

COLOMBO, July 21. The COVID-19 pandemic is set to cost listed companies in Sri Lanka 161.6 million U.S. dollars in revenue this financial year, local media quoting Fitch Ratings reported here Tuesday.

Fitch Ratings, in a report analyzing post-coronavirus corporate performance, said that a 7 percent year-on-year decline in revenue was expected for listed companies in Sri Lanka this year.

“Fitch has taken negative rating action on 30 percent of the corporates in its portfolio to reflect the impact of the pandemic, with the majority of these entities remaining on Negative Outlook or Rating Watch Negative,” the report said.

According to Fitch, the highest revenue decline is forecasted for the hotel sector which is expected to experience a whopping 75 percent year-on-year loss in revenue, amounting to 35 percent of the island country’s aggregate revenue loss.

“Demand from domestic visitors has resumed, but we do not expect a meaningful recovery in hotel earnings until international travel normalizes,” Fitch Ratings said.

The second highest revenue drop is projected for consumer durables retailers, amounting to 50 percent of aggregate loss.

Despite a release in pent-up demand following the easing of curfew and lockdown measures, Fitch expects that “demand may again weaken on falling disposable incomes after the initial post-lockdown enthusiasm dissipates.”

Sectors that are projected to remain resilient under the new normal include telecommunications and pharmaceuticals, as well as essential consumer goods such as food and beverages.

Fitch Ratings expects Sri Lanka’s Gross Domestic Product to contract by 1.3 percent in 2020, but rebound to 4 percent in 2021. Xinhua