Hemas’ continues focus on consumer and healthcare, delivers strong 1Q performance

Hemas Holdings PLC (HHL) delivered yet another strong quarter amidst challenging operating environment conditions with key businesses gaining momentum in all areas, the company announced.

The group’s continued focus on growing the Consumer and Healthcare businesses along with operational excellence, contributed to the resilient performance. However, the resurgence of COVID-19 positive cases, and inter provincial and localised limitations on movement resulted in the growth momentum slowing down towards the latter part of the quarter. In addition, the market witnessed inflationary headwinds impacting the profitability growth, Group CEO Kasturi C. Wilson said in a statement releasing the 1stQ 2021/22 results to shareholders with a copy to the media.

The statement said all sectors witnessed a steady growth in comparison to the lower operating results in the base quarter, which was impacted by the island wide lockdown in 2020. All key entities reached pre-COVID performance levels this quarter. The group recorded a consolidated revenue of Rs.16.4 billion for the quarter ended June 30, 2021, an increase of 26.7 percent over last year. HHL achieved a group operating profit of 1.1 billion, a growth of 77.5 percent over the same quarter last year, whilst group earnings of Rs.637.3 million is an increase of Rs.367.9 million over the previous year. Group earnings excluding the remaining leisure assets stood at Rs.720.4 million, a growth of 63.6 per cent over last year.

The statement said the Consumer Brands sector recorded a revenue of Rs.5.4 billion and earnings of Rs.230.1 million as a result of its continued focus in increasing distribution reach and brand excellence. “The impact of the third wave COVID-19 had on distribution channels was lower than the previous year, with industry, government and trade channel’s preparedness resulting in the sector seeing a double-digit year-on-year volume growth across the channels,” it said.

Atlas witnessed a year-on-year growth with improved sales across all key categories including books and pens. While closure of schools resulted in a contraction of the stationery market, a favourable consumer shift was seen within modern trade channels and e-commerce platforms. The Atlas e-shop managed to successfully capitalise from the growth in online trade, the company said.

Hemas Healthcare Sector posted a revenue of Rs.10.5 billion whilst first quarter operating profits and earnings stood at Rs.835.1 million and Rs.621.3 million, respectively. Performance was broad-based with all sectors growing competitively whilst hospitals experienced a strong recovery surpassing pre-COVID performance levels.

“Pharmaceutical businesses delivered a stable revenue growth during the quarter. However, steep exchange rate depreciation continues to impose pressure on profit margins across both segments impacting the overall sector profitability. Our new oral solid dosage manufacturing plant in Sri Lanka, is expected to commence commercial production towards the end of the second quarter, barring any unforeseen events arising due to the prevailing environment,” the statement said.