Hemas shows resilience in Q2 with strong performance

Group CEO Kasturi C. Wilson

Hemas Holdings PLC (HHL) yesterday announced a cumulative Group revenue of Rs. 59 billion in the 1H of FY24 reflecting a 13.5% YoY growth.

It said, amid the increasing strain on operating expenses, the Group’s operating profit and earnings in 1H experienced a marginal growth of 4.1% and 3.7%, reaching Rs. 4.9 billion and Rs. 2.3 billion, respectively.

During the 2Q quarter, the Group achieved a 10% growth in revenue, posting Rs. 29.8 billion for the quarter, with operating profits and earnings for the quarter increasing to Rs. 2.8 billion and Rs. 1.2 billion, respectively. 

Hemas also announced its first interim dividend of 40 cents per share.

Hemas Holdings Group CEO Kasturi C. Wilson said while Sri Lanka’s economy displays certain signs of recovery, with moderating inflation, stabilised exchange rates, and efforts to rebuild reserves, the broader macroeconomic and policy landscape continues to present formidable constraints. “Challenges persist in terms of consumer sentiments and constraints on disposable income would continue to pose obstacles for businesses across the industries,” she added.

According to the Group CEO, Hemas maintains a cautious yet optimistic outlook, drawing upon its expertise to ensure resilience as the country navigates the complexities of the economic recovery phase.

“The Group’s strategic objectives remain closely aligned with its purpose, propelling innovative solutions to address the continually evolving consumer landscape,” she said.  

In a forward-looking approach, Hemas will continue to grow in Consumer and Healthcare spaces while greater emphasis is placed on the development of core capabilities of localised innovation, internationalisation, and the establishment of a distinctive Sri Lankan pharmaceutical brand. Moreover, the Group is focused on simplifying its operations to enhance efficiency and agility, Wilson added.

The cumulative revenue reported for the Consumer Brands Sector witnessed a growth of 19.9% to reach Rs. 22.6 billion while the operating profits reported a growth of 37.0% due to reduced raw material prices, improved productivity and stable exchange rates. In line with the growth in operating profits and lower finance costs, earnings for the period witnessed a growth of 74.9% to reach Rs. 2 billion.

The Sector reported a revenue of Rs.11.5 billion for the quarter, a growth of 13.9% over last year driven by the performance of both the Home and Personal care and Learning segments. The earnings improved by 67.3% to surpass the Rs 1 billion mark due to over 50% reduction in finance cost under improved working capital base, along with reduction in key raw material prices.

In healthcare, the cumulative revenue for the Sector increased by 10.4% to reach Rs. 35.6 billion driven by the Pharmaceutical  Businesses of the Group. While the Sector’s operating profits of Rs 2.7 billion increased by 6.3% in line with revenue growth, this upward momentum was not translated into earnings, primarily due to escalating finance costs related to funding working capital in the Pharmaceutical Businesses.

The Sector posted a revenue of Rs. 17.9 billion for the quarter, a growth of 8.4% over last year, while the operating profits increased by 16.0% to Rs. 1.6 billion. However, the benefit was negated under heightened finance costs, to report an earnings growth of 6.0%.

The Mobility Sector posted a cumulative revenue of Rs 787.0 million, a decline of 13.8% in comparison to the same period last year while the earnings witnessed a higher decline of 53.9% mainly due to the reduced finance income for the Sector. Accordingly, the quarter witnessed a decline of 19.7% and 59.9% to reach Rs 376.2 million in revenue and Rs.136.8 million in earnings under challenging operating conditions.