Sri Lanka hospital profits boosted by Dengue: Hemas
ECONOMYNEXT – Sri Lanka’s Hemas Group said falling profits from price controls on pharmaceuticals and currency depreciation was contained by a dengue epidemic, which has boosted occupancy at its hospitals.
Although pharmaceutical sales increased, profits were hit, the group said.
"However, this decline in profitability was mitigated by the strong growth in hospitals," Chief Executive Steven Enderby told shareholders. "Hospitals operated at high capacity levels over the quarter in part due to the dengue epidemic."
Hemas said consolidated healthcare revenues grew 18.7 percent to 5.1 billion rupees, which grew operating profits 22.4 percent.
Meanwhile, Sri Lanka imposing price controls on pharmaceuticals has busted the currency from 131 rupees to 154 rupees from early 2015, printing money through a soft pegged Central Bank. Central Bank money printing also worsens the credit cycle, creating booms and busts. The latest balance of payments crisis came from money printed to finance a state salary hike and vote-buying subsidies.
But now, the economy is going through a correction, with more taxes being raised to finances state spending and income redistribution. State spending usually gives less ‘bang-for-buck’ as it has no incentive to choose the best return for other people’s money.
Hemas said its Bangladesh operations was also in the midst of a restructuring, and the leisure sector suffered losses. Its logistics unit grew 80 percent with shipping, helped by agencies for Evergreen and Far Shipping.
In the June quarter, group profits were down a marginal 3 percent to 694 million rupees. The group reported earnings of 1.21 rupees for the quarter. In mid-day trading on Monday, the stock was up 4.0 rupees to 144.
Revenues grew 14.9 percent to 11.3 billion rupees, cost of sales grew at a faster 17 percent to 7.1 billion rupees and gross profits rose 11 percent to 4.1 billion rupees. (Colombo/Aug14/2017)