ECONOMYNEXT – Sri Lanka’s Hemas Holdings group net profit rose 47 percent to 863 million rupees in the March 2019 quarter from a year ago with its consumer business in the red and lower earnings from healthcare while tourism profits almost doubled.
Hemas Holdings group chief executive Steven Enderby said they were concerned about the impact of April suicide bombings of churches and hotels and communal unrest on domestic consumer demand.
Quarterly earnings per share were 1.45 rupees, interim accounts showed. The share was trading at unchanged at 69 rupees
In the financial year to 31 March 2019, EPS was 5.65 rupees with net profit up 25 percent to 3.4 billion rupees and sales up 29 percent to 64 billion rupees
Quarterly sales rose almost seven percent to 16 billion rupees in the March 2019 quarter from a year ago while cost of sales rose 4.4 percent to 10.4 billion rupees with gross profit up 11.7 percent to 5.6 billion rupees.
The accounts showed the Hemas group consumer business slipped into the red in the March quarter with a loss of 70 million rupees compared with net profit of 110 million rupees the previous year.
Net profits from Hemas group’s healthcare business, its biggest, were slightly lower at 503 million rupees in the quarter while profit from its hotel and travel business almost doubled to 403 million rupees.
Profit from the group’s mobility business fell sharply to 59 million rupees from 146 million rupees the year before.
“Profitability during the fourth quarter was challenging due to duty increases coupled with currency devaluations impacting the price of raw materials,” Hemas Holdings group chief executive Steven Enderby said.
“Marketing and trade spends were higher in the quarter as we invested behind the line-up of relaunches brought to market during late Q3.”
Enderby said Hemas group’s healthcare business profits fell during the year but began to recover in the fourth quarter when the rupee appreciated by four percent against the US dollar.
Hemas pharmaceutical distribution saw strong sales growth stemming from the latest addition of new principals last year and continued efforts to improve the existing portfolio.
“However, the impact of price regulation and significant currency depreciation continues to compress margins,” Enderby said.
“Additionally, the increase in interest costs from working capital funding added to pressure on earnings.”
Enderby said Hemas was “reviewing every cost to see how we can reduce losses from the decline in tourist arrivals” after the April bombings.
“We are also concerned about the impact of the terrorist events and communal unrest on domestic consumer demand.”
(COLOMBO 27 May 2019)