Hemas ups profit from continuing operations by 21% to Rs. 1.5 b
Wednesday, 18 February 2015 00:26
Hemas Holdings Plc has increased consolidated operating profit from continuing operations by 21% to Rs. 1.5 billion in the first nine months of FY 2015.
The Group recorded revenue of Rs. 23.6 billion for the period, a growth of 19.5%.
“Key drivers of this growth were the Consumer, Healthcare and Leisure sectors,” Hemas CEO Steven Enderby said.
The consolidated operating profit for the period was Rs. 2.2 billion, recording a growth of 19.0%.
Underlying earnings growth of the core businesses adjusted for one-off items stood at a healthy 46.0%. The key one-off items were the Rs. 157 million losses on the disposal of the Group’s stake in Hemas Power Plc and the capital gains recognised in the previous year of Rs. 364 million from the land transfer of Peace Haven to PH Resorts, a joint venture company. However, consolidated earnings posted a decline of 21.5% to record Rs. 1.2 billion.
Following are excerpts from CEO Enderby’s review accompanying interim results:
Our FMCG sector posted a revenue growth of 24.0% led by both volume and value growth seen in the personal care, personal wash and home care categories. During the quarter our personal wash brand, Velvet launched a new variant with the refreshing fragrance of Aloe and Kohomba, while our sanitary napkin brand Fems introduced a premium napkin to cater to increasing demand since its re-launch last year. Our revenue growth was also boosted by our operations in Bangladesh, which launching its own distribution network in November. Due to this excellent performance profitability grew by 32.9% for the period.
The Healthcare sector achieved revenues of Rs. 10.1Bn, a growth of 14.2%, led by our Hospitals, which saw a steady build up in revenue at our third hospital in Thalawathugoda and good growth at JL Morison. The pharmaceutical business continued to be impacted by challenging market conditions that have prevailed since the end of 2013.
The overall market contracted by 1% during the period ending October 2014. Notwithstanding the adverse circumstances the business posted a reasonable top-line growth, maintaining its market leadership position with a market share of 21% (Source: IMS). Our hospital in Wattala continued to strengthen its performance during the quarter with increased occupancy, additional services and the rapid expansion of our diagnostics business contributing to a growth in bottom-line. Our Hospital at Thalawathugoda posted a significant growth in revenue of 148% over last year winning the patronage of the local community.
During the quarter our efforts at striving for excellence at our hospitals was rewarded with our Wattala hospital winning the runner up award for the healthcare category at the National Business Excellence Awards 2014 organised by the National Chamber of Commerce of Sri Lanka, while our Southern Hospital won the first place in the private hospital sector at the “Dhakshina Suwa Wiru Abhishekaya – 2014” Award Ceremony, organised by the Provincial Director of Health Services – Southern Province.
JL Morison performed well during the quarter posting a revenue growth of 44% over the previous year contributed to by the growth in healthcare and agro businesses. The upgrading of our manufacturing facility continued to improve the healthcare segment revenues during the quarter, while the sector’s investments in building its OTC and consumer portfolio boosted category revenue.
JL Morison released ‘A Chronicle of J. L. Morison Son & Jones (Ceylon) PLC,’ a coffee table book narrating its origins and development through the years, in commemoration of its Diamond Jubilee in December 2014. The book includes the origins, evolution and growth of JL Morison through troughs and peaks and is filled with anecdotal stories from long-standing employees and excerpts from company documents which record the company’s history over the past seven and half decades. We believe in building on this heritage in strengthening the company’s product portfolio.
Our leisure sector posted a growth of 24.5% to post a revenue of Rs. 2 b, largely attributable to the growth achieved by our hotel sector which recorded a top-line of Rs. 1 b, a growth of 47%. The performance of the hotel sector reflects the impact of the closure of our Club Hotel Dolphin and Hotel
Sigiriya for refurbishment during the corresponding period, last year. Our hotels are enjoying a reasonable winter season with the hotels posting an overall occupancy of 77% for the period, in comparison to 76% posted the previous year.
The transportation sector revenue for the period stood at Rs. 1.1 b, a growth of 22.6% while profitability grew at 19.6% to record Rs. 345 m. Performance was largely driven by the increase in performance of the Maritime and Logistic segments, while our Aviation segment showed signs of recovery during the quarter. Our recent venture in Logistics, posted a good performance during the quarter with an increase in container handling, storage and haulage activities aiding the increase in both the sector top-line and bottom-line.
During the quarter the Group divested its interest in its Power business to a consortium of buyers, consisting of NDB Capital Holdings PLC, ACL Cables PLC and Trydan Partners Private Ltd for a consideration of Rs. 1.7 b, recognising a capital loss of Rs. 157 m on its book value. The focus of the group is developing our core strengths in Wellness, Leisure and Mobility industries.
As we head into the final quarter of the financial year, we are confident that our portfolio rationalisation and renewed focus on our core areas will yield us strong growth across our businesses as we look to maintain and build on our industry leading positions.