Sri Lanka’s Softlogic plunges to losses in June amid rising finance costs

ECONOMYNEXT- Sri Lanka’s Softlogic Holdings Plc made 752.6 million rupees in net losses in the June 2019 quarter from a 49.7 million rupee profit a year earlier on higher finance costs and slower revenue growth following the Easter Sunday attacks, the firm said in its interim financial statement.

Softlogic made a loss of 63 cents per share. The share closed trading on Friday at 15.60 rupees.

Group-level revenue grew 7.1 per cent from a year earlier to 17.1 billion rupees in the June quarter while cost of sales rose 5.8 percent to 10.7 billion rupees and gross profits grew 9.6 percent to 6.4 billion rupees.

The firm, which has diversified interests including in retail, financial services, healthcare, tourism and automobiles said that its sales did not grow faster during the quarter due to the Easter Sunday attacks, which dampened tourist arrivals and domestic consumer demand.

"The first quarter of the financial year witnessed an unexpected disruption to the economy following the Easter Sunday attacks," Chairman Ashok Pathirage said in a statement.

"This woefully affected all sectors of the economy with hotels, hospitals and retail enduring the immediate impact of the aftermath of the Easter attacks," he said.

Financial cost grew 58.7 percent to 2.0 billion rupees while finance costs rose 82 percent to 571.5 million rupees.

Group-level long-term borrowings grew to 29.4 billion rupees as at end-June from 25.1 billion rupees as at end-March.

Short-term borrowings grew to 10.1 billion rupees from 9.8 billion rupees three months earlier while other current financial liabilities grew to 24.7 billion rupees from 23.1 billion rupees.

The group’s retail and telecommunications segment posted 267.7 million rupees in losses during the quarter from a 182 million rupee profit a year earlier.

Pathirage said that a pickup in of retail activity, mainly from local demand with a slight improvement in tourist arrivals was seen toward the latter part of the quarter.

The Crystal Jade restaurant chain will open a new outlet at the One Galle Face by Shangri-La mall in October/November, he said.

Pathirage said that the supermarket chain will be expanded as well.

The leisure and property segment losses widened to 408.8 million rupees from 173.3 million rupee a year earlier on falling revenue at the Movenpick and Centara hotels due to lower tourist arrivals following the Easter Sunday attacks.

Healthcare service profits fell to 94.8 million rupees from 422 million rupees a year earlier with rising interest costs following the opening of a new hospital in Kandy.

Activity at the group’s hospitals fell due to patients and employees fearing gathering in crowded spaces, Pathirage said.

The Group’s financial services segment, which includes a non-bank finance company, an insurance firm and an investment arm posted profits of 394.6 million rupees, up from 226.7 million rupees a year earlier. (Colombo/ August 16/ 2019)