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Sri Lanka’s Softlogic group cuts losses in Sept as hospital, retail recovers

ECONOMYNEXT – Sri Lanka’s Softlogic Holdings Plc lost 1.09 billion rupees in the September quarter, up 44 percent from a year though losses were sharply down from the June quarter amid a recovery in hospital and retail, interim accounts show.

In the June quarter Softlogic lost 2.8 billion rupees in the June 2020 quarter paying 2.4 billion rupees in interest amid Coronavirus lockdowns.

The health care sector made a profit 609 million rupees in the September 2020 quarter up from 218 million last year, recovering from a loss of 392 million June.

“Healthcare sector witnessed an immediate resurgence in revenue after the lockdown was lifted as patients sought treatments and surgeries which were hitherto postponed due to the lockdown,” Chairman Ashok Pathirage told shareholders.

“Asiri Kandy’s performance has continuously exceeded expectations due to the latent demand of the Central and North-Eastern Provinces materialising.”

Retail and telecom lost 548 million rupees in September, sharply down from a 1.2 billion rupee loss in June.

“A strategic decision to shift our sales channel to online (Omni-Channel) was made and we allocated more resources in those potential segments,” Pathirage said.

“GLOMARK, Softlogic’s supermarket chain, seized demand opportunities arising from irrational consumer stock-piling during and after the lockdown.

“Our online sales platform, which gained momentum during the period, is expected to increase its contribution to top line further with consumers getting accustomed to ordering online.

“The smart phone business recorded high sales volumes during the period triggered by the side effects of C19 which resulted in distant learning and working.”

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A new Coronavirus outbreak however began in October.

“As the outbreak began, our supermarket business, were deemed essential services and remained open for business with scheduled doorstep deliveries,” Pathirage said.

“Mount Lavinia outlet is the 8th Glomark outlet that was opened last week. We expect to open Glomark outlets in Malabe, Colombo-7 and Negombo shortly.

In retail ODEL has been hit by the halt on tourist arrivals.

Softlogic’s leisure operations continue to be under pressure losing 409 million rupees.

The losses in the quarter came partly due to a transfer of 1.7 billion rupees to life insurance as interest rates fell.

“The change in insurance contract liabilities affecting profitability is due to the interest rate decline for contracts with guaranteed return and the shortfall of the life fund to meet actuarial liabilities,” Pathirage said.

The group has rationalized consumer durables outlets but is optimistic of the future, he said.

“The pandemic has no doubt disrupted ordinary life at every level of society and hence businesses have increasingly come under greater scrutiny for optimisation of resources and efficiency to survive the systemic risks of an unknown future,” Pathirage said.

“However, we are optimistic that while “all things shall pass” businesses will become stronger because of the determination to navigate intelligently through the pandemic.” (Colombo/Nov17/2020)

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