Sunshine Holdings reports strong results in FY16, improves bottom line of all segments

Diversified conglomerate lays groundwork for expansion by attracting FDI and via new investments in international FMCG operations and healthcare retail outlets

Diversified conglomerate Sunshine Holdings PLC has posted a strong performance for the year ending 31 March 2016 (FY16), improving the Profit After Tax (PAT) of all its business segments, while laying the foundation for further expansion with a number of new investments and initiatives.

According to results issued to the Colombo Stock Exchange (CSE), for FY16, Sunshine Holding’ PAT grew to Rs. 1,218 million, a significant 16.3% improvement year-on-year (YoY).

Net Asset Value per Share increased to Rs. 42.78 as at end FY16, compared to Rs. 39.24 at the beginning of the year (FY15). Earnings per Share (EPS) too improved to Rs. 4.34 in FY16 from Rs. 3.62 in FY15.

Despite challenges, particularly in the Agribusiness sector, Consolidated Revenue was up by 6.7% YoY to Rs. 17,422 million. Three of the five divisions – Healthcare, Fast-Moving Consumer Goods (FMCG) and Packaging – reported double digit growth in revenue while the Renewable Energy division too improved its revenue. The Agribusiness sector enhanced its PAT despite a reduction in the top-line – as part of a strategic move to reduce volumes and further enhance focus on quality in the Tea sub segment.

Healthcare, represented by Sunshine Holdings’ fully-owned subsidiary and one of the country’s largest distributors in the healthcare space – Sunshine Healthcare Lanka Ltd. (SHL) – was the main contributor to Group revenue in FY16 (accounting for 41.1% of the total). It expanded well above the growth of the overall market. Revenue was up by 17.9% YoY to Rs. 7,161 million in FY16 while PAT was Rs. 327 million, an improvement of 41.2% YoY.

The FMCG sector, represented by Watawala Tea Ceylon Ltd. (WTC), the country’s largest branded tea company, reported a revenue of Rs. 3,440 million for FY16, a growth of 18.0% YoY. This was on the back of both price and volume growth, the latter largely driven by Watawala Tea – the country’s single largest tea brand. PAT from FMCG grew 7.7% YoY, to Rs. 423 million in FY16.

Agribusiness, represented by Watawala Plantations PLC – the country’s largest manufacturer of palm oil and one of the largest Regional Plantation Companies (RCPs) – saw its PAT expand to Rs. 518 million, up by 32.5% YoY. The increase in profitability of the sector, despite severe challenges, was a result of a prudent strategic move by Watawala Plantations to cut down on its output of tea (which translated into reduction in Revenue), and to curtail losses by further improving quality.

Packaging and Renewable Energy Divisions – represented by Sunshine Packaging Ltd. and Sunshine Energy Ltd. respectively – too achieved substantial improvements in both the top line and the bottom line. Sunshine Packaging’s Revenue was Rs. 362 million in FY16, an improvement of 34.1% YoY while its PAT was up by Rs. 40 million – to Rs. 16 million. Sunshine Energy expanded its revenue to Rs. 120 million in FY16, a 6.9% growth YoY while its PAT too increased by Rs. 12 million to Rs. 32 million.

“Sunshine Holdings takes much pride in this strong financial performance, particularly since it represents bottom line growth across all our business segments, despite significant challenges in some sectors,” Sunshine Holdings Group Managing Director (GMD) Vish Govindasamy said. “More importantly, these results have been achieved while laying the foundation for sustainable future growth – through investments aimed at enhancing the competencies of our staff, distribution networks and infrastructure.”

In FY16 the FMCG segment invested Rs. 88 million for international expansion alone and the international marketing team will be leveraged to expand the lucrative export business. 

In Healthcare, a number of new agencies are expected to be added during FY17 to further strengthen the product portfolio. The rapid expansion of the outlet network of Healthguard, the country’s premier urban pharma, wellness and beauty retail chain, fully owned by Sunshine Holdings’ healthcare arm will continue, with six new outlets expected to be opened in FY17. Therefore together with the eight Healthguard outlets opened in FY16, the network will stand at 30 outlets by end FY17. The Healthguard online store, opened during FY16 is also expected to support future top and bottom line growth. 

As part of its efforts to become the first healthcare retailer in Sri Lanka to provide a service of an international standard, Healthguard also opened a dedicated training centre in early FY17, further stepping up its HR initiatives to enhance the competencies of employees. 

Members of the Sunshine Holdings Group have also succeeded in attracting substantial Foreign Direct Investment (FDI) recently to further enhance and expand operations. The Group set up a commercial dairy operation in March 2016 – Watawala Dairy Ltd. – together with Duxton Asset Management, with a $ 3 million FDI infusion from the latter. In May 2016, the packaging arm of the group – Sunshine Packaging Lanka Ltd. also attracted FDI of $ 2 million from Primeco Holdings Ltd. – a conglomerate incorporated in Hong Kong.