Hemas records 85% profit growth for 1H

Healthcare records Rs. 3.1 billion, leisure reduces losses to Rs. 8 million, power grows by 17% y-o-y and transport records 46% increase Hemas Holdings recorded growth in healthcare, transport and power to post 85% profit growth during the first half results released yesterday.

The company in a media communiqué noted that the group recorded consolidated revenues of Rs. 8.7 b for the period ended 30 September 2010, a growth of 18% over last year, mainly driven by the growth of healthcare and power businesses.

“Consolidated earnings stood at Rs. 588 m for the first six months of the year, a notable growth of 85% over the previous year. Improved profitability in most of our businesses has resulted in significant margin improvements, with the group operating margin increasing from 8.4% to 10.3%, and the net margin increasing from 4.3% to 6.8%,” the statement maintained.

The FMCG sector showed a growth in turnover of 8%, recording Rs. 2.9 b and a marginal drop in earnings of 5% recording Rs. 294 m for the period under review. Most categories in its FMCG portfolio contributed positively to the growth in the sector revenue. However, the sector gross margin suffered a marginal drop, mainly due to the impact of a new CESS levied on some of its imported material.

During the year, the state-of-the-art Dankotuwa factory continued to be recognised for its manufacturing excellence, winning a Gold award at the CNCI ‘Achievers of Industrial Excellence’ Awards 2010 and the Gold Award at the ‘National Productivity Award 2009/10’.

“The healthcare sector recorded a turnover of Rs. 3.1 b, a growth of 30% year-on-year, and earnings of Rs. 122 m in comparison to Rs. 62 m recorded last year, reflecting a growth of 97.8%. The pharmaceutical business performed beyond expectations, with a 27% growth in top-line while strengthening its market leadership position with a market share of 16.4%.

“The flagship hospital in Wattala continued to improve its performance, achieving cash break-even position in May 2010 and was the main contributor to the growth in the hospitals category, which posted a revenue growth of 57%. Both hospitals in Wattala and Galle continued to win the patronage and trust of the local community, who have contributed greatly to the steady growth of our hospitals.

“In September 2010, the Hemas Hospital laboratory expanded their services by commencing a minilab in Ragama that would not only carry out laboratory investigations but also provide ECG service, channelling services and CT & MRI referral services for Hemas Hospital Wattala.”

The statement also pointed out that the Leisure sector achieved revenues of Rs. 489 m in comparison to Rs. 341 m the previous year, and reduced its loss to Rs. 8 m in comparison to the loss of Rs. 37 m recorded the previous year.

In August, its hotel subsidiary, Serendib Hotels PLC acquired 19.9% of Cyprea Lanka (Pvt) Ltd., which owns Kani Lanka Resort & Spa. The balance 80.1% was acquired by Minor International, its hotel partner.

All its hotels continue to benefit from the positive outlook of the country in the post war scenario and are currently enjoying higher occupancy levels compared to last year with both Serendib and Dolphin hotels recording average occupancy rates in excess of 70% during summer. Revenue of the Serendib Group was impacted by the partial closure of Hotel Dolphin, which reopened in October 2010 after completion of its upgrade at a cost of Rs. 530 m.

The Transportation sector recorded revenues of Rs. 374 m, in comparison to Rs. 332 m achieved last year and earnings of Rs.133 m, resulting in an impressive a year-on-year earnings growth of 46%.

While the overall industry grew in both passenger and cargo volumes, its Aviation segment grew at a faster growth trajectory. This contributed to both a significant improvement in performance as at the end of September 2010 and further strengthened its market share in the Aviation services industry. Its maritime business benefited from both enhanced maritime services and increased volumes through the Port of Colombo.

Hemas Power experienced an impressive first half, recording a revenue of Rs. 1.6 b, a growth of 17% year-on-year and earnings of Rs. 153 m, compared to Rs. 4 m achieved last year. Its hydro power plants in Giddawa and Agra Oya contributed a total of 10.1Gwh to the national grid, whilst its thermal power plant, Heladhanavi, contributed 345.1Gwh during the six months ending September 2010.

The hydro power plants showed an increase in performance over last quarter as a result of healthy rainfall in both catchment areas and higher tariffs in comparison to the previous year.  Heladhanavi revenues were enhanced by the pass-through effect of increasing fuel prices that were revised upwards on 1 September 2010.

Significant reductions in finance costs due to repayment of the syndicate loan and reduced interest rates boosted sector earnings, while the absence of the high overhaul charge in comparison to last year further augmented the sector’s performance.

“With the continued improvement in our hospital performance, coupled with the increased winter volumes for hotels, we expect to build on our strong first half performance to end the year on a positive note.”  

* Hemas Power experienced an impressive first half, recording a revenue of Rs. 1.6 b, a growth of 17% year-on-year and earnings of Rs. 153 m, compared to Rs. 4 m achieved last year.

* The healthcare sector recorded a turnover of Rs. 3.1 b, a growth of 30% year-on-year, and earnings of Rs. 122 m in comparison to Rs. 62 m recorded last year

* The Transportation sector recorded revenues of Rs. 374 m; in comparison to Rs. 332 m achieved last year, and earnings of Rs.133 m.

* The FMCG sector showed a growth in turnover of 8%, recording Rs. 2.9 b, and a marginal drop in earnings of 5% recording Rs. 294 m.