Difficult year for Sunshine Holdings amidst drug price controls
View(s):The group involved in healthcare, plantations, FMCG, packaging and renewable energy, saw consolidated revenue reach Rs. 19.2 billion for the latest financial year, up 10.3 per cent Year-on-Year (YoY) while Profit After Tax (PAT) reached Rs. 1.6 billion, up by 33.1 per cent from the previous year.
In a media release, the company said profitability was bolstered by drastic improvements in the group’s agri-business which recorded a 3.2 per cent increase in revenue up to Rs. 6.5 billion despite a 5.1 per cent contraction in tea revenue in the wake of unfavorable weather conditions during the year. The sector’s tea crop was affected by bad weather, even as the company continues to focus on a concerted strategy to grow quality teas to offset reductions in volumes.
Palm oil reported an increase of 43.8 per cent with volumes rising by 18.2 per cent. While escalating tea prices helped support a notable recovery in the group’s tea sub-sector, they also resulted in increased pressure on FMCG margins during the second half of the year.
“Moving forward the group’s FMCG brand anticipated improved potential in the sector resulting from the scaling up of the ‘Zesta Connoisseur’ brand across Shangri-La properties worldwide and other growth-oriented strategies designed to further consolidate the brand both locally and internationally,” the release said.
It said the imposition of pharmaceutical drug price controls on 48 separate molecules by the Ministry of Health over the last year continued to generate negative ramifications for Sunshine’s Healthcare segment.
The pharma segment which represents 64 per cent of healthcare revenue grew at only 6 per cent YoY, due to the impact of reduced prices leading to a sharp 36.9 per cent contraction in PAT down to Rs. 198 million. The company’s pharma segment is the 2nd largest player in the country with 11.3 per cent share of the market.