Despite losses, Hemas sees recovery ahead
View(s):The first quarter FY2019/20 performances has been a challenging period for Hemas with revenues 2.3 per cent below last year.
This has been, primarily, a result of the terrorist attacks of April 21, with the aftermath causing economic slowdown and difficult trading conditions.
“Our profitability has been more significantly impacted as we recorded a loss before tax of Rs.140 million. Key factors in this have been in the business mix with our higher margin Consumer businesses experiencing a slowdown while our lower margin healthcare businesses grew revenue by 7.6 per cent. In line with the sharp downturn in the tourism industry, our Leisure and Travel interests incurred a loss at earnings level of Rs.129 million,” Group CEO Steven Enderby said in a review of the group’s latest quarterly performance.
The generally depressed economic environment has resulted in weak performance across the group in particular at Morisons and N able. The group was also impacted by a number of one-offs totaling Rs.130 million including a charge from the adoption of SLFRS 16. A dividend tax charge of Rs.278 million was incurred following the upstreaming of dividends to pay the final dividend and redeem the group’s listed debenture.
“During the quarter, both consumer businesses were impacted by market wide weak consumer sentiment and baseless ethnically divisive attacks on our business and brands. Many of these attacks appear designed to mislead the public and exacerbate already strained communal relationships. We continue our efforts to ensure everyone understands that building great Sri Lankan consumer and healthcare brands and services is an important component of the national economy generating employment and taxes, developing great suppliers and sales and distribution teams across the country, and ultimately driving the livelihoods of thousands of families,” he said.
Consumer sector revenue stood at Rs.4.6 billionn for the three months ending June 30, 2019, a YoY decline of 14.3 per cent. Latest market data indicates an overall contraction of the Personal Care market by 4 per cent. Atlas performance was subdued due to the factors referred to above and during the month of May schools were closed as a result of the prolonged emergency situation in the country.
“We remain shocked and saddened by the events that unfolded on Easter Sunday and strongly condemn these terrorist attacks. However, we are optimistic that Sri Lanka is on its path to recovery displaying its customary resilience,” Mr. Enderby said.