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Diversified Sri Lankan conglomerate Sunshine Holdings (CSE: SUN) reported top-line performance growth of 6.9% YoY (year-on-year) to stand at Rs. 22.6 billion during the year ended 31 March (FY18/19), with the group’s Healthcare and Consumer sectors leading growth, while the healthcare segment remained the major contributor to total group revenues.
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Sunshine Holdings Group Managing Director Vish Govindasamy |
Profit after tax (PAT) for the period in review declined to Rs. 1.1 billion, and profit margins have also reduced to 5.1% compared to last year’s 8.5%, mainly due to lower profitability in the agribusiness sector. The group’s Healthcare business emerged as the largest contributor to Sunshine’s top-line performance, accounting for 40% of total revenue, while Agribusiness and Consumer Goods sectors of the group contributed 31% and 25% respectively of the total revenue.
Profit after Tax and Minority Interest (PATMI) decreased by 16.7% YoY to Rs. 553 million; the healthcare sector made the largest contribution to PATMI, accounting for 62% of the total while consumer accounted for 46% of the total. Net Asset Value per share increased to Rs. 50.26 as at end March 2019, compared to Rs. 46.71 at end March 2018.
Commenting on their performance, Sunshine Holdings Group Managing Director Vish Govindasamy said, “We are pleased to announce that the Sunshine Group has posted notable results during FY18/19 by executing well-placed strategies in a year of challenging market conditions for all our business sectors. During the year in review, we have continued to display a resilient and entrepreneurial spirit in the face of such difficulties as a Group. Though our Agribusiness revenue has contracted slightly, both Healthcare and Consumer Goods have contributed immensely towards the Group revenue, continuing their strong growth momentum from last year.”
During the period in review, the Group’s Healthcare sector grew its revenue by 14.1% YoY to Rs. 9.3 billion. Though the second round of drug price control—which came in to effect in September 2018—had a negative impact, the revenue growth was propelled on the back of higher sales volume, new agency acquisitions, and footfall growth in its retail subsector—represented by its rapidly-growing Healthguard franchise. The pharma sub-segment, which represents 66% of healthcare revenue, grew by 10.4% due to higher sales volumes and price increases YoY. Reported PAT for healthcare amounted to Rs. 368 million in FY18/19, up 42.4% YoY at a margin of 3.9%.
“In Healthcare, we expect to increase the revenue in the first quarter of FY19/20, with price adjustments made by the NMRA on price-controlled products. A greater focus will be on improving the product range and service quality. At Healthguard, the focus continues to be on developing a speciality range of Beauty and Wellness products while attracting more customers to the chain through digital platforms,” Govindasamy noted further.
Spearheaded by brands like ‘Zesta’, ‘Watawala Tea’ and ‘Ran Kahata’, the Consumer sector continued its impressive growth by posting revenues of Rs. 5.9 billion in FY18/19, up 8.9% YoY, on the back of both volume and price growth. PAT from the Consumer segment grew by 66.4% YoY, to stand at Rs. 489 million for the period in review. The increase was mainly driven by the lower input costs resulting in a higher gross profit margin.
Govindasamy mentioned that the Consumer business would continue to invest behind its brands to scale their domestic business and the Group will continue to strengthen its international business operation efficiency further.
The Group’s agribusiness sector, led by Watawala Plantations PLC (WATA) and Hatton Plantations PLC (HPL), saw a revenue decline of 2% YoY to Rs. 7.1 billion due to unfavourable weather conditions which impacted the tea plantations managed by Hatton Plantations. Tea volumes contracted by 11.2% YoY, resulting in a revenue drop of 13.4% YoY. However, palm oil sub-sector reported an increase in revenue of 21.5% YoY due to the rise in net sale average (NSA) and a marginal increase in crop. Due to lower profitability in the tea subsegment, PAT for Agri sector FY19 amounted to Rs. 650 million, contracting 44.9% YoY.
On Agribusiness sector, Govindasamy said, “We expect to see moderate growth in volumes for the Palm Oil segment due to shift in yield curve while prices are expected to be stable in the short run. We have also exited the tea plantation business which is in line with the group’s strategy of taking significant steps in refocusing our footprint in healthcare and consumer segments for strategic specialisation.”
Sunshine’s Renewable Energy recorded revenues of Rs. 356 million, up 43.2% YoY from Rs. 248 million during the same period last year as a result of higher rainfall in the catchment areas. The sector made PAT of Rs. 63 million for FY19, compared to a profit of Rs. 49 million in last year.
The construction of Sunshine’s third hydropower plant has been concluded, and the Group is looking ahead for a fully-operational financial year. Sky Solar, the roof-top solar company of Sunshine Energy, is expecting to occupy many rooftops within the group and further expand its operations.
About Sunshine Holdings
Sunshine Holdings PLC is a diversified holding company contributing to ‘nation building’ by creating value in vital sectors of the Sri Lankan economy – including healthcare, agribusiness, fast-moving consumer goods and renewable energy. Many of its business units are leaders in their respective sectors, have secured partnerships with top global brands and have won prestigious awards at the national as well as the regional level. The leading brands of the group include Zesta, Healthguard, Watawala Tea, Pedia Plus and Diabeta Plus. The Estate Management Services Limited (EMS), the agri-business arm of Sunshine Holdings PLC, manages Watawala Plantations, Sri Lanka’s largest palm oil producer and Hatton Plantations, one of the largest tea producers in Sri Lanka. The company’s healthcare marketing unit is the second largest in its sector nationally. Its tea sector also consists of Sri Lanka’s best-selling tea brand locally. The group, which employs approximately 10,000, generates over $ 125 million in revenue.
