Softlogic Group eyes Asia, Africa for expansion
View(s):Poised for growth, the Softlogic Group, one of Sri Lanka’s largest conglomerates, is looking to expand outside the shores of the country and commencing operations of its successful sectors in Asian and African markets “to replicate our success in Sri Lanka.”
Mr.. Ashok Pathirage
This was stated by Group Chairman/Managing Director Ashok Pathirage, in the company’s annual 2019/19 review released earlier this week.
The group’s revenue rose by 14 per cent to Rs.75.1 billion in the latest financial year against Rs.66 billion in 2017/18 while gross profit rose to Rs.27.6 billion from Rs.23. 6 billion.
“There is significant scope for expanding our internationally certified healthcare services into neighbouring countries with positive outcomes while African markets demonstrate potential for insurance products. Understandably we are excited by our next growth phase as we seek to position the Softlogic Group as a leading player in the region in selected sectors,” he said.
While the group delivered aggressive growth over the year, financing its acquisitions and expansion with debt, Mr. Pathirage said that higher levels of debt relative to peers has been part and parcel of their risk profile which has been proactively managed with forethought and foresight as evinced by managed exits to realise cash flow in the recent past. “We are evaluating several options for reducing debt and are likely to deploy several strategies to achieve a satisfactory outcome to improve the financial gearing of the group,” he said.
The Retail Sector recorded 6 per cent top line growth despite declining disposable incomes contributing Rs. 37.7 billion to group revenue. Comprising fashion brands, electronics, restaurants and more recently modern trade, this sector has unparalleled bandwidth and is poised for growth as eager customers seek to enhance their lifestyles, the report said.
Healthcare recorded 12 per cent revenue growth to Rs. 13.5 billion despite increasing price regulation in the healthcare. Sector revenues were increased due to increased operational efforts and to a lesser extent by the acquisition of Hemas Southern Hospital in November 2018.
Softlogic Capital PLC, the holding company of the Financial Services Sector in the group, delivered a strong performance largely attributable to the performance of Softlogic Insurance as gross written premiums grew by 30 per cent outpacing industry growth of 13 per cent.
“This supported sector revenue growth of 23 per cent as we expanded our distribution channels to enhance market penetration in Life Insurance with the pioneering micro insurance product with Dialog enabling daily payment of premiums which is a first in the country,” it said.
The group’s Information Technology Sector broadened its value proposition which has positioned this sector for strong growth.
On automobiles, the report said that the operating environment became more challenging as rupee depreciation, requirement for cash margins and enhanced emission standards for all motor vehicles exacerbated issues for an intensely competitive market. A large order for Ford ambulances supported performance of the automobiles business.
Revenue of the Leisure and Property Sector recorded strong revenue growth of 21 per cent as both Centara and Movenpick increased occupancy supported by positive guest reviews and increased tourist arrivals. “It is commendable that the sector has turned in an operating profit of Rs. 66 million compared to a loss of Rs. 142 million in the previous year in a relatively short space of time after the launch of Mövenpick,” it said.