Softlogic Holdings extends rebound with robust 1H performance

The rebound at the diversified Softlogic Holdings PLC is continuing with robust first-half performance.

Consolidated revenue recorded a strong growth of 46% to Rs. 52.6 billion during 1HFY22 with the quarter registering a commendable growth of 29% to Rs. 28.1 billion. Operating profit for the six-month period recorded a two-fold increase to Rs. 5.9 billion while the quarter witnessed an increase of 41% to Rs. 3.6 billion overcoming numerous systemic challenges.

Softlogic’s retail sector emerged to be one of the top performers during the quarter amid supply-side challenges with the consequent lockdown and re-imposition of the import restrictions consequent to USD shortages in the market.

Asiri Health continued its contribution to manage the third wave by operating intermediate care centres, critical care units in all hospitals of Asiri Health in Colombo, Kandy, Galle and Matara.

Softlogic Life Insurance has achieved superior digitalisation across its distribution channels encompassing agency, alternate and micro-mobile, which eliminates paperwork and ensures faster convenience for customers and other business partners. 

The company has demonstrated its strength throughout the pandemic compensating COVID-19-related claims, which exceeded Rs. 500 million for the year. The company continues to provide the fastest claim settlement in the industry with more than 85% of claims being settled in one single day.

Softlogic Finance, which returned to profitability in the quarter, has raised a total sum of Rs. 5.64 billion by way of Rights Issues and Subordinated debt. The capital raised enhanced company’s liquidity position and improved its Tier 1 capital and Total Capital Adequacy Ratios of the company in compliance with regulatory requirements allowing it to move forward on a clear growth path and capture the opportunities available in the market.

With the country’s heightened digitalisation drive in the pandemic era, most companies had to fast track digitalisation and automation for business continuation. Softlogic’s IT business, the Group’s first company, is a key beneficiary of this rapid transformation as business intelligence and industry 4.0 based innovations are being developed as value-added services.

Gross Profit for the six-month period increased 43% to Rs. 15.7 billion while the quarter recorded a growth of 19% to Rs. 8.5 billion.

Distribution and administrative expenses increased 18% and 7% to Rs. 1.6 billion and Rs. 8.7 billion respectively during 1HFY22 while the quarter recorded cost increases of 1% and 8% to Rs. 790 million and Rs. 4 billion respectively. Total operational expenses increased 8% to Rs. 10.3 billion during 1HFY22 while the quarter witnessed a 7% increase in operational expenses to Rs. 5.1 billion.

Cumulative Group EBITDA more than doubled to Rs. 7.8 billion in 1HFY22 in comparison to Rs. 3.8 billion in 1HFY21. Quarterly, EBITDA rose 31% to Rs. 4.6 billion.

Group profitability reported a strong rebound recording a PAT of Rs. 883 million for the cumulative period compared with a loss of Rs. 3.8 billion in 1HFY21. A two-fold performance growth was recorded for the quarter as the PAT reached Rs. 971 million compared with a loss of Rs. 936 million in 2QFY21.

Softlogic Holdings Chairman Ashok Pathirage said with the reopening of the economy and vaccination drive reaching its potential, consumer confidence has witnessed an uptick in demand for Consumer Electronics, Fashion and Smartphones. 

“It is heartening to note that tourism, and apparel exports, have seen steady progress which is an important factor in addressing the current shortfall of foreign exchange in the country. The increase witnessed in foreign job seekers would also ensure that our foreign exchange remittances will be bolstered going forward. The ongoing import restrictions will therefore ease with the resumption of increased economic activities when global businesses and consumers alike start catching up on lost time,” Pathirage added.

He said during these extraordinary times, Softlogic has navigated this storm sensibly due to its diversified investment portfolio and fast response to critical change. 

“No sooner the global economic activities normalises, the combined effect of these changes will have a manifold impact on the economy and Group performance. Our investments in Retail, healthcare, IT platforms and financial services will also deliver value when these macroeconomic changes come into fruition,” he said. 

“Disruptions to supply-side activities have caused artificial shortage globally, which is now reflected in a cost-push inflationary cycle. This would however be reversed when business confidence is restored and the National Budget for 2022/23 addresses most of these challenges,” Pathirage added.