Sri Lanka Hemas pharma unit maintains margins despite price controls, depreciation
ECONOMYNEXT – Morison PLC, the pharmaceutical manufacturing unit of Sri Lanka’s Hemas Holdings group, said it managed to maintain net profit margin at 15% last year despite price controls, higher costs and a weaker rupee.
The company’s sales fell 5% to Rs3.8 billion in the year to 31 March 2018 largely because of poor sales of its over-the-counter (OTC) brands, together with slower sales in its range of distributed cosmetics, Morison chairman Husein Esufally said.
The loss of the distribution rights for Alcon, one of its longstanding principals due to a global acquisition, also contributed to lower sales, he told shareholders in the company’s annual report.
However, Morison’s net profit for the year rose 9% to Rs 564 million from the previous year.
Morison, previously known as J L Morison Son & Jones (Ceylon), which counts MSJ Industries (Ceylon) Ltd., s a wholly owned subsidiary, not only manufactures pharmaceutical and OTC products but also imports and distributes international healthcare and consumer products.
Managing Director Murtaza Esufally said net profit margin was maintained at 15%, the same as last year.
“The year saw many challenges that had an adverse effect on the performance of your company,” he told shareholders.
“The slow growth of the economy, high food inflation and high taxes led to less consumer demand both for pharmaceuticals and consumer products.
The private pharmaceutical industry grew by only 1% last year as compared to the 11% growth in the previous year. Government purchases of medicine were also flat last year, Murtaza Esufally said.
“The challenges in maintaining product margins continued in the year under review, as we operate in a price-controlled pharmaceutical market. The increase in raw material costs and rupee depreciation significantly impacted margins,” he said.
“However, productivity gains and efficiency improvements in the production facility helped the company to maintain margin levels on par with the previous year.”
(COLOMBO, June 04, 2018)