Hemas says losses from Bangladesh operations, leisure sector also affected
View(s):Hemas Holdings PLC (HHL) and its subsidiaries achieved a consolidated revenue of Rs.23 billion for the six months ending September 2017, up by 11.6 per cent from the previous year.
However profit attributable to equity holders fell by 8 per cent to Rs.1.4 billion. Year to date operating profit reached Rs.1.96 billion, a YoY decline of 5.4 per cent, the company said in a media release.
“Despite consolidated revenue growing aided by higher turnover from the healthcare and mobility sectors, group earnings indicate a decline due to our Bangladesh personal care business, pharmaceutical distribution, leisure and travel — all facing margin challenges,” the company said.
Further cost escalations were experienced as the company invested in expanding the consumer portfolio and building new pharmaceutical and logistics facilities.
Domestic consumer demand remains soft impacted by higher headline inflation, drought conditions persisting in parts of the country, and headwinds from currency fluctuations and VAT increase.
The home and personal care sector revenue of Rs.8.1 billion showed a drop of 2.6 per cent over the previous financial year.
“Despite the challenging domestic macro environment, our Sri Lanka business reported steady growth in key personal care categories with market shares being maintained across most major categories. The decline in operational performance has been impacted by our Bangladesh operations where bad weather conditions during Q1, the restructuring of our sales and distribution network, increased competition and the expansion of our portfolio resulted in lower margins. We are now seeing signs of increased stability in our revamped sales and distribution network in Bangladesh and have introduced the first ever marbleised herbal-beauty soap “Kumarika Herbal Soap” in Bangladesh during August 2017. With regard to new markets, we incurred start-up losses in West Bengal as we commenced operations,” the release said.
Hemas Hospitals have operated at high occupancy levels during the first six months of the financial year, partly due to the dengue epidemic. “We are also seeing growth from increased surgeries as we continue to expand our services, push to higher levels of clinical excellence and generate improved performance from investments made in the sector,” Hemas said.
The Leisure, Travel and Aviation business recorded a total revenue of Rs.1.6 billion, down by 14.7 per cent YoY for the six months under consideration. During Q1, overall arrivals to Sri Lanka witnessed a moderation in growth as a result of the negative publicity and travel warnings due to flooding and landslides in May. Serendib Hotels reported a 5.6 per cent fall in revenue due to decline in occupancies and average room rates primarily due to increase in room inventory.
Hemas Logistics and Maritime recorded revenue growth of 54 per cent over last year with revenues of Rs.1.3 billion. This growth has been driven by both the group’s agencies and logistics.
“The overall business environment appears challenging for the second half of the year. We have developed plans to drive improved profitability and address areas of weaker performance identified during the period to September 30, 2017. The team will continue to push hard to drive growth and efficiently manage emerging risks and challenges,” according to Hemas Group CEO Steven Enderby.