Hemas Holdings growth up 21% in 1Q 2018-‘19

Hemas Holdings PLC (HHL) has recorded consolidated revenue of Rs.13.5 billion for the first quarter ended June 30, a year-onyear (YoY) growth of 21.3 per cent, led by higher contributions in our consumer and healthcare sectors.

Group operating profit at Rs.895.7 million in the first quarter of the financial year is an increase of 3.5 per cent over the previous financial year. Operating profit growth has been impacted by losses at N*Able, the company’s IT technology solutions business, coupled with a weaker macroeconomic environment with sluggish consumer demand as disposable incomes have been dampened by rising costs from Rupee depreciation and increased taxes, according to Steven Enderby, Chief Executive Officer, as stated in the CEO’s report.

“The profit attributable to equity holders of the parent at Rs. 554.3 million is a decrease of 20.2 per cent in the corresponding period of the previous financial year. This is due to reduced interest income post utilisation of cash reserves to acquire Atlas in January 2018 and increased interest costs relating to higher working capital due to strong growth in Pharmaceutical Distribution and the loan financing for our new logistics park. All three of these investments should contribute to earnings from Q3. Excluding the first quarter performance of Atlas,

HHL recorded revenue and operating profit growth of 10.9 per cent and 1.5 per cent correspondingly,” the report said.

Consumer business revenue grew by 36.2 per cent while market conditions domestically remain depressed with most market commentaries indicating low or negative growth in most major FMCG categories.

“Ag a i n s t this backdrop, our business has performed well. Our Bangladesh business experienced revenue growth of 6.1 per cent following the Kumarika relaunch last December. However, profitability still remains a challenge due to heavy marketing spend post launch. Atlas performance has been on track in Q1 with revenues up by 8.8 per cent over last year and break even in operating profits in line with its normal seasonal performance trend.”

Consolidated healthcare sector revenue for the first three months under review stood at Rs. 6.4 billion, a YoY increase of 24.7 per cent whilst operating profit and earnings indicated a decline of 2 per cent and 6 per cent.

“Hemas pharmaceutical distribution operation registered strong revenue growth. However, managing the impact of price regulation and devaluations in the wake of depreciation of the rupee was a key operational challenge,” the report added.

Hemas Leisure, Travel and Aviation business recorded a growth of 16.2 per cent for the three months under consideration. Overall, the country experienced an upward trend in tourist arrivals during the quarter. Serendib Hotels reported 11 per cent growth in revenue due to rise in average room rates and occupancies across the group. Anantara Peace Haven Tangalle too had a satisfactory performance during the year.

Hemas Logistics and Maritime recorded revenue growth of 15.4 per cent over last year with revenues of Rs.718.3 million.

“Overall we have had a satisfactory start to the year in a difficult macro environment. Solid performance in our core Sri Lanka consumer businesses supported by improvements in leisure and travel sector performance and the seasonality effect of Atlas, position us well to improve operating profit growth in the coming quarters of the financial year,” Mr. Enderby added.

Group operating profit at Rs.895.7 million in the first quarter of the financial year is an increase of 3.5 per cent over the previous financial year