Sri Lanka seen recovering after devastating April attacks
View(s):The macro-economic slowdown in Sri Lanka in the aftermath of April terrorist attacks was further compounded by the contraction of business and trading activity, declining investor confidence, and falling consumer purchasing power, says Softlogic Holdings Plc in its interim financial statement for the 6-months period ending September 2019.
Deficiency in implementing policy decisions to restore investor sentiments and rejuvenate tourism and other key sectors affected by the Easter attacks impacted consumer demand, it said.
Retail was affected by the dismal growth and financial costs while Healthcare’s robust performance was offset by losses of the Kandy hospital, which is expected to breakeven by the end of the financial year, while Leisure was mostly affected by lack of tourist traffic.
“Nonetheless, Softlogic is a forward-looking conglomerate and has overcome some of the systemic hurdles due to economies of scale and cost disciplined measures and has been boldly continuing with its capital expansion projects especially in One Galle Face by Shangri La, which is now opened to the public occupying the largest shopping mall space,” the statement added.
The Odel departmental store which is now on par with any other international departmental store takes up 54,000 sq ft on three conjoined floors where it offers a much larger space for Home and Beauty centres for its shoppers. COCO by Cotton Collection along with 20 other branded apparel stores of international standard have also opened in One Galle Face (4 more branded stores to be added soon).
Group revenue increased 9 per cent to Rs. 37.2 billion during the 1HFY20 while quarterly revenue increased 10 per cent to Rs. 20 billion. Primary contributors to group turnover were Retail (50 per cent), Financial Services (20 per cent) and Healthcare Services (19 per cent). The non-core vertical, comprising Automobile and Leisure, made up 3 per cent of Group turnover while the IT sector contributed 6 per cent of Group topline.
Gross Profit (GP) improved 10 per cent to Rs. 13.5 billion during the 1HFY20 maintaining group GP margins at 36 per cent levels. Quarterly Gross Profit grew 11 per cent to Rs. 7.2 billion.
Slow growth in tourism in the aftermath of the Easter Sunday attacks, a high interest rate and tax regime affected retail performance coinciding with retail spending contracting at the same time.
Being a future-focused conglomerate, Softlogic continued with its capital projects during the period under review. Softlogic is the only company in Sri Lanka retailing over 100 internationally renowned retail brands.
“… we are optimistic that economic consolidation will take place in conjunction with the newly elected President as it would inspire confidence in the body politic leaving no room for any milestone in the economy to be unturned. With this optimism, we believe the security situation in the country will improve dramatically thereby facilitating the resurgence of tourism and related industries which in turn would result in a recovery benefitting our performance,” the statement added.