Colombo, 19 August 2026 – Eastern Merchants PLC (CSE: EMER) has reported a challenging first quarter for the financial year 2026, recording substantial losses for both the company and the group, according to its interim financial statements for the period ended 30th June 2026. The unaudited results, announced on August 17, 2026, highlight a significant downturn in profitability driven by a notable drop in revenue and a sharp increase in operational and finance-related expenses.
Consolidated Performance: Significant Dip in Profitability
The Group’s consolidated revenue for the quarter stood at Rs. 479.45 million, marking a 15% decrease compared to Rs. 565.41 million reported in the corresponding quarter of the previous year (Q1 2025). This revenue contraction significantly impacted the gross profit, which plummeted by 59% from Rs. 63.63 million in Q1 2025 to Rs. 26.13 million in Q1 2026.
The challenges were further compounded by rising costs:
- Administrative Expenses: Increased by 12% to Rs. 77.62 million from Rs. 69.19 million.
- Distribution Expenses: Saw a massive 160% jump to Rs. 31.64 million from Rs. 12.15 million.
These factors led to a significant increase in the Group’s operating loss, which widened by 479% to Rs. 81.35 million in Q1 2026, compared to an operating loss of Rs. 14.06 million in the prior year. Finance expenses also rose by 46% to Rs. 16.69 million, while finance income drastically reduced by 60% to Rs. 2.93 million.
Ultimately, the Group posted a substantial pre-tax loss of Rs. 95.11 million, a 422% increase from the Rs. 18.23 million loss recorded in Q1 2025. The loss after taxation mirrored this figure, resulting in a basic earnings per share (EPS) of Rs. (0.82) for the quarter, a significant decline from Rs. (0.16) in the comparative period.
Company (Standalone) Performance Mirrors Group Trends
Eastern Merchants PLC’s standalone performance reflected similar adverse trends. The company’s revenue decreased by 18% to Rs. 248.16 million from Rs. 302.53 million in Q1 2025. Gross profit witnessed an even sharper decline of 92%, settling at Rs. 2.33 million compared to Rs. 29.69 million in the previous year.
Key figures for the company (standalone) included:
- A shift from an operating profit of Rs. 4.60 million in Q1 2025 to an operating loss of Rs. 28.24 million in Q1 2026, representing a 714% deterioration.
- Administrative expenses rose by 49% to Rs. 27.08 million.
- Finance income saw a steep decline, contributing to a pre-tax loss of Rs. 29.13 million, a significant reversal from the Rs. 10.17 million profit reported in Q1 2025.
The company’s basic EPS moved into negative territory at Rs. (0.25), down from a positive Rs. 0.09 in the prior year.
Financial Position and Cash Flow
As of 30th June 2026, the Group’s total assets stood at Rs. 2.99 billion, a decrease from Rs. 3.17 billion as at 31st March 2026. Total equity attributable to equity holders of the parent also saw a reduction to Rs. 1.99 billion from Rs. 2.09 billion over the same period.
Despite the losses, the Group generated positive cash flows from operating activities, which increased to Rs. 92.59 million in Q1 2026 from Rs. 75.32 million in Q1 2025, indicating an improvement in operational cash generation before considering financing and investing activities.
Segment Performance Overview
The primary segment, “Export of Traditional & Non-Traditional Products,” reported a segment revenue of Rs. 479.67 million, down from Rs. 565.63 million in Q1 2025. This segment recorded a significant segment loss of Rs. 81.72 million for the quarter, compared to a loss of Rs. 15.53 million in the prior year, underscoring the challenges faced within its core export operations.
The Board of Directors approved these unaudited financial statements on August 17, 2026. The company, incorporated and domiciled in Sri Lanka, is listed on the Colombo Stock Exchange, with its principal activities centered on the export of traditional and non-traditional commodities.
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