Hemas Holdings posts solid growth in 1H
Hemas
Hemas Holdings Plc has recorded a solid first half performance with consolidated group revenue of Rs. 18.4 billion for the six months ended 30 September 2015, reflecting a Year-on-Year (YoY) growth of 19.6%. This led to an operating profit of Rs. 1.6 billion and earnings of Rs. 1.1 billion, a growth of 11.6% and 18.4% respectively.
However, last year’s corresponding period includes a one-off capital gain of Rs. 89 million from the sale of the Nimex Brand and excluding the same, the underlying earnings growth of the group stood at 31.6% over last year.
During the second quarter of FY15/16, the group recorded a revenue growth of 16.7% compared with the same quarter last year. Good growth was recorded by the FMCG and Healthcare sectors of 16.3% each.
“However, both operating profit and earnings show a negative growth of 1.2% and 0.7% respectively, due to exchange losses from Hemas’ new hotel and the one-off capital gain and profit from discontinued operations recorded in the previous year. Excluding these, operating profit and earnings recorded an underlying growth of 9.0% and 16.6% respectively,” Hemas CEO Steven Enderby said.
The FMCG sector reported revenues of Rs. 7.4 billion for the six months under consideration, a 24.5% YoY increase from the previous financial year. Sector earnings were driven by a volume growth across major brands in personal wash, personal care, feminine hygiene and homecare and in both general trade and modern trade sales channels. Furthermore, the introduction of new product variants in the Diva, Fems and Velvet brands directly complemented the higher topline growth.
Hemas’ Bangladesh operation maintained its high revenue growth, almost doubling last year’s performance with the extended market reach through the recently established sales team starting to deliver. The FMCG sector recorded PBT growth of 30.3% growth and underlying earnings growth of 30.1% excluding one-off capital gains.
Fuelled by 16.7% growth in Hemas’ pharmaceutical distribution business topline, the healthcare segment of the group achieved sales of Rs.7.7 billion for the six months ended 30 September 2015.
“We continued to maintain our market leadership position in pharmaceutical distribution. This is an encouraging performance during a period of significant regulatory change in the pharmaceutical industry,” Enderby said.
Spurred by increased demand for healthcare in the country and the growing diagnostic network of the group, all three hospitals recorded a YoY growth in revenue of 29.9%. Earnings growth recorded by the segment has been improved by hospitals’ performance while the rupee devaluation has negatively impacted pharmaceutical imports.
JL Morison posted a significant topline growth of 35.7% and an earnings growth of 77.6%. Both healthcare and OTC/Consumer brands contributed significantly towards the overall revenue growth. Revenue growth in healthcare was driven by increasing sales through the Rx pharmaceutical buy back arrangement with the Government of Sri Lanka. The high growth rates in revenue and earnings are also in part due to the plant closure in the previous year reducing both the revenue and earnings during 14/15.
Hemas’ Transportation sector revenue of Rs. 828.7 million reflects a YoY growth of 14.6%, stemming from strong performance of its logistics business. The growth of the logistics business was mainly due to the securing of new projects, warehouses operating with full capacity and haulage business growing with the car carrier operation performing well.
However, container depot performance was impacted with lower volumes and it was a challenging first half for the GSA businesses, due to the decline in outbound travel and low yields of ticketing income. As a result, the segmental earnings from the transportation sector stood at Rs.189 million, a 13.5% drop from the previous year.
The leisure segment recorded total revenue of Rs. 1.3 billion for the six months under consideration, registering a 7.5% increase over that of the first half of financial year 2014/15. The increase was primarily driven by the healthy overall occupancy rate of 74%.
Hemas’ two new 5 star properties which are under construction are now at an advanced stage of completion. Anantara, Peace Haven, Tangalle will commence its operations in December 2015 and Anantara Kalutara, which is scheduled to open during the first half of 2016, continues to make good progress.
The IT solutions business N*able has delivered revenue growth of 12.3%. However, earnings growth was negative due to key projects not materialising on schedule.
“With good growth in our key sectors and the team continuing to work hard to improve the performance of the group, we remain optimistic that we will achieve continued growth in the remainder of the year,” Hemas Holdings CEO Enderby added.