Sri Lanka’s Sunshine Holdings March quarter, annual profits down

COLOMBO (EconomyNext) – Sri Lanka’s diversified Sunshine Holdings group reported a fall in profit in the March 2015 quarter and financial year from the year before owing to what the company said were tough market conditions.

The March 2015 quarter net profit fell 42 percent to 98 million rupees from a year ago with earnings per share at 73 cents while sales rose three percent to 4.1 billion rupees, a stock exchange filing said.

In the financial year ended March 31, 2015, the group reported EPS of 3.62 rupees with net profit down 19 percent to 484 million rupees from the previous year while sales rose 11 percent to 16.3 billion rupees.

Sunshine Holdings said in a statement key business segments, particularly healthcare and agribusiness, grew above industry averages “despite challenging conditions”.

Fast moving consumer goods (FMCG), healthcare and agribusiness revenues grew at 20.4 percent, 10.2 percent and 9.6 percent respectively from the year before.

“Group profit after tax (PAT), however, was affected partially by goodwill written off (of 62 million rupees) and declined by 10.4 percent to 1,047 million rupees for the financial year.”

Sunshine Holdings said its EBIT (earnings before interest and tax) margin experienced a marginal contraction, to 8.7 percent in FY15 from 10.9 percent in FY14.

“Improved margins in the FMCG segment were offset by a contraction of margins in the agribusiness and healthcare sectors because of unfavourable market conditions,” the statement said.

“Despite the challenging conditions in many of our key segments, we were successful in increasing revenue growth above industry averages. This healthy financial performance underscores Sunshine Holdings’ solid fundamentals,” Sunshine Holdings PLC Group Managing Director, Vish Govindasamy said.

“The company’s visionary strategic initiatives are continuing to pay dividends in boosting long-term growth – such as the diversification into palm oil – and we remain optimistic about future prospects, despite potential future challenges.”

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PAT for healthcare declined 35.8 percent to 228 million rupees from a year ago. Normalized PAT (adjusting for goodwill write-off) amounted to 289 million rupees, the statement said.

“Stagnation in overall market growth adversely impacted the pharma segment (which accounted for 67.3 percent of healthcare revenue in FY15),” it said.

PAT for the FMCG segment improved 27.8 percent to 397 million rupees in FY15 from the year before, with margin increasing to 13.3 percent in FY15 from 12.5 percent a year earlier.

“Driven by the sale of ‘Watawala Tea’, the branded tea sub-sector achieved a 11.6 percent increase in sales (based on volume) of 3.1 million kg,” the statement said.

PAT from the group’s agri sector for FY15 was lower at 408 million rupees, compared to 434 million rupees in FY14, mainly due to the downturn in tea, which recorded a net loss of 428 million rupees for FY15.

“Poor weather, combined with a significant decline in the price of Ceylon Tea in global markets and other external factors, eroded profits,” Sunshine Holdings said.

“Timely strategic diversification to palm oil, which recorded a PAT of 780 million rupees for FY 15, continued to boost the agri sector and more than compensated for losses in both tea and rubber, despite a global decline net selling average of palm oil, in FY15, in line with the drop in global crude oil prices.”
 

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