Hemas Holdings posts 29% growth in underlying earnings

Tuesday, 18 November 2014 01:51 -     - {{hitsCtrl.values.hits}}

The Hemas Holdings group has recorded consolidated revenues of Rs. 15.7 b, a growth of 22.0%, and group earnings of Rs. 887 m, a drop of 9.9% over the same period last year. However last year’s corresponding period included a one off capital gain of Rs. 364 m on the transfer of Peace Haven to PH Resorts, a joint venture company. Underlying earnings, adjusted for one-off items, recorded a growth of 29.5% over last year. Hemas Holdings CEO Steven Enderby said the Group’s personal care business has grown revenue by 26.0%, to Rs. 5.9 b with personal wash, oral care and home care categories contributing positively to sector top line growth. The sector enjoyed a good quarter with encouraging volume growth contributing to the increase in revenue. In addition to good financial performance it has also received industry recognition for the performance of its leading consumer brands,' he said. Its personal wash brand, Velvet, was awarded Sri Lanka’s ‘Brand of the Year’, ‘Local brand of the Year’ and ‘Product brand of the Year’ at the recent Brand Excellence Awards held by the Sri Lanka Institute of Marketing. During the quarter, the sector divested its interest in the tissue and toilet paper category with the sale of Nimex. The Healthcare sector recorded a growth in revenue of 13.0% to Rs. 6.5 b, led by the higher contribution of its third hospital in Thalawathugoda, good growth at Wattala hospital and recent acquisition, JL Morison. “Our pharmaceutical segment’s performance continued to be hampered by weak market conditions. The industry grew at 0.03% during the second quarter (Source: IMS). In these weak market conditions, the company maintained its market leadership position,” Enderby said. J.L. Morison achieved revenue growth of 5.3% to Rs. 1.3 b, led by an increase in production at its pharmaceutical manufacturing operation, which grew by 21.4% over last year. This growth is being augmented by its investment in the upgrading of the facility to meet globally-recognised Good Manufacturing Practices and an increase in capacity. The business has recovered well from the plant shutdown which impacted Q1 results, according to the Hemas CEO. The Leisure sector achieved revenue growth of 39.4% to record Rs. 1.2 b. The growth in sector revenue was driven by the Hotels segment with revenues of Rs. 638 m, an increase of 86.9%, while earnings grew to Rs. 89 m during the period under review. However year-on-year comparisons are not particularly meaningful due to the closure of Club Hotel Dolphin and Hotel Sigiriya for refurbishment during the corresponding period the previous year. During the period the hotels recorded an average occupancy rate of 73%. The Transportation sector posted revenues of Rs. 723 m, 27.0% growth, with a strong contribution from the Maritime and Logistic segments. The Maritime segment continued to enjoy an increase in volumes driven by an increase in transhipment volumes to Sri Lanka, along with the addition of new destination ports during the last quarter. The Logistics segment consolidated its presence in container yard operations increasing capacity utilisation and contributed to the overall sector earnings growth of 16.3%. Hemas’ IT solutions business, N-able, recovered well from project delays in Q1 to enjoy a good quarter with the completion of several key contracts. The business recorded earnings of Rs. 43 m for the year to date, a significant increase over the same period last year. The Power sector posted revenue of Rs. 262 m, a decline of 22.1% over the previous year hampered by the low rainfall experienced in Q1. The heat rate reserve charge on the Heladhanavi income statement led to the decline in sector profitability, recording a loss of Rs. 45 m, a decline of 132.1% over the previous year. During the quarter, the Group entered into an agreement to sell its shareholding in Hemas Power PLC to a consortium of buyers, consisting of NDB Capital Holdings PLC, ACL Cables PLC and Trydan Partners Ltd., thus divesting the company’s interest in the Power sector. “This is an important move for the Group in line with our strategy to focus on our core strengths of Wellness, Leisure and Mobility,” Enderby emphasised. “This renewed focus on our core strengths coupled with ongoing investments in healthcare, personal care and leisure provides us with the confidence to weather an increasingly competitive business environment and achieve growth across our business sectors,” the Hemas CEO added.