Hemas goes for multiple initiatives to cut costs, stay agile midst COVID-19 shocks

• CEO says Group has businesses with no revenues, many with significantly depressed revenues
• Confident of overcoming challenges with new measures taken along with Hemas team’s serious responsibility, resolute, united determination
• Hemas supporting Government and the community on COVID-19 battle using  in-house resources and capabilities

Diversified blue chip Hemas Holdings PLC has announced multiple initiatives to cut cost and stay agile amidst severe impact from the local and global crisis linked to the novel coronavirus (COVID-19) pandemic.

Hemas Holdings Group CEO Steven Enderby

The measures include freezing all discretionary expenditure, capital expenditure, recruitment and driving an efficiency program across the Group.

In a memo to staff Hemas Holdings Group CEO Steven Enderby also said the management is compelled to take some difficult decisions across all major areas of cost.

“We do this mindful of the need to protect jobs and salaries and to protect Hemas today so we can emerge positioned to regrow in a post COVID-19 world,” he added.

For the next three months starting 1 May, Hemas has decided: All Board members will take a 50% reduction in their directors fees and promoter directors will take a 100% reduction; Group CEO will take a 50% salary reduction; and Managing Directors across the Group and Corporate Office functional heads will take a 35% salary reduction.

Additionally, businesses with no revenues, now and for the next few months, will be subject to salary cuts.

There will be no increments or bonuses in April whilst Hemas will review this position in July and decide then if the company is in a position to have the normal increment cycle and pay performance bonuses.

With 8,000 employees, Hemas has interests in Healthcare, Mobility, Leisure, Travel and Aviation products and services.        

Enderby noted that with the fighting spirit with which each of Hemas’ businesses has responded to the challenge to regrow revenues, significantly reduce costs and improve cash flows. “If we are unable to achieve this within each of our businesses further cash conservation measures will need to be implemented,” he added.

In a passionate note to the Hemas staff, Enderby stressed that today “we face a crisis on a scale Hemas has never experienced in its 71 years. The impact of COVID-19 on our businesses is significant as is the threat to the nation’s health and economy”.

“As Hemas, we face this crisis with remarkable and dedicated teams, full of determination, energy, and intelligence, a serious responsibility as a leading player in Sri Lanka’s consumer and healthcare market and a resolute, united determination to overcome,” he added.

According to the Group CEO the impact on Hemas’ operations is dramatic. “Hotels are shut, airlines are not operational, and schools are closed for the foreseeable future. Those of us who are keeping our essential services operating face huge daily challenges.”

“The teams at Pharma, Morisons, Hospitals and FMCG are doing an exceptional job protecting the health of the nation. Our teams are ensuring pharmaceuticals continue to be available across the country, our hospitals operate as normal 24x7 and hygiene products are available through FMCG and Nimex at Atlas.

“In addition, our teams at Maritime and Logistics have a key role in the running of the country’s trade infrastructure. We continue to work hard across the whole Group each one playing their part in winning the fight,” Enderby added.

He also revealed that the financial impact of COVID-19 is significantly negative. “We have businesses with no revenues, many with significantly depressed revenues and one business, Pharma, that is on plan. If we exclude our pharmaceutical distribution business, our revenues last week were a fraction of our pre COVID-19 levels. This is having a dramatic impact on the Group and results in a major cash outflow that is not sustainable,” Enderby told the Hemas employees.

Noting the setting is very challenging time for all personally and for Hemas as a business, he said over the last few days he consulted at length with the Board and senior management and decided on priorities as a Group in a COVID-19 infected world.

He said Hemas must ensure that the healthcare and consumer hygiene businesses continue to operate and in a manner that is safe for staff. “The country needs us to play our part at this time. To enable this, we have engaged a specialist in infectious diseases to further strengthen employee safety. We will prioritise protecting jobs across the Group as much as we possibly can. We will operate our businesses by focusing on cashflow.

“We will continue to support Government and the community, using our resources and capabilities. We will use this time to prepare ourselves for a post COVID-19 world and the new consumer and healthcare demands this will create.”

In his memo to the Hemas staff, Group CEO also said: “We will continue to operate our essential services and provide products and services that are critical in the fight against COVID-19. We will do so in accordance with all Government directives and in a manner that prioritises the health and safety of our teams.

“In addition, to keeping our essential services operating well, we will also examine how we can use our resources and capabilities to help Sri Lanka win the fight against COVID-19. I am so proud of the multiple initiatives we have seen: the team converting Club Hotel Dolphin into a quarantine centre, Atlas’ tech guys with their helpful robot, manufacturing masks for the Army, team members from across the Group helping out at Healthnet and the provision of handwashing facilities and Shield soap at key Government locations. The list goes on and on. We have an exceptional team at Hemas who are driven by purpose.”

 

The future

 

“This is the most significant fight Hemas has ever faced. That we will come through this I have no doubt. We will overcome through unity and determination and emerge in a post COVID-19 world which will create new challenges and opportunities.

“By both revenues and profitability our businesses are focused on the health and wellbeing of consumers in Sri Lanka and in the region. We have a team already thinking hard about that post COVID-19 world and how we can position ourselves to meet transformed consumer needs, for health, wellness and consumer wellbeing products and services. We will position Hemas to serve our Sri Lankan and regional consumers better than ever before.

“I know of no team who I would rather have alongside me at this time.”