Hemas 1Q bottom line up 32% to Rs. 347 m

Hemas Holdings Plc has posted a net profit attributable to equity holders of Rs. 346.6 million in the first quarter of FY13, an increase of 32% over the corresponding period of last year.

Group after-tax profit was Rs. 361.7 million, up by 28% whilst pre-tax profit grew by 37% to Rs. 457.5 million. Group revenue rose by 27% to Rs. 6.3 billion in first quarter ended on 30 June 2012.

“The performance of the Group as a whole, and many of our sectors, was encouraging despite a challenging economic environment where inflation, interest rates and exchange rates remained unfavourable,” Hemas Holdings Chief Executive Husein Esufally said in his review accompanying interim results.

The first set of financial statements of Hemas Holdings PLC in compliance with the new Sri Lanka Financial Reporting Standards (SLFRS) is published this time for the quarter ended 30 June 2012. The Group recorded consolidated revenues of Rs. 6.3 billion and earnings of Rs. 334 million under SLFRS.

The Company has also presented the financial statements for the quarter ended 30 June 2012 and the comparatives for the quarter ended 30 June 2011 as per SLAS to facilitate year-on-year comparisons of financial performance. Under SLAS, the Group recorded consolidated revenues of Rs. 6.3 billion, a year-on-year growth of 27.1% and earnings of Rs. 347 million, a year-on-year growth of 32.3%.

Esufally said revenue growth was driven by Power, Healthcare and FMCG sectors recording growth levels of 52.3%, 22.1% and 13.8% respectively. FMCG, Leisure, Healthcare and Transportation sectors, which recorded a growth of 38.3%, 124.8%, 22.7% and 62.0% respectively, were the key contributors to the impressive earnings growth during the quarter.

“Our FMCG sector enjoyed a good first quarter posting a growth of 13.8%, to record revenue of Rs. 1.8 billion. Sector revenues were driven by the growth in our hair care, skin care, personal wash and home care categories,” the CEO said.

Earnings grew by 38.3% to record Rs. 163 million for the quarter, notwithstanding a depreciating rupee which contributed to an increase in raw material costs during the period. During the quarter the personal care portfolio strengthened its market position, with its toothpaste, sanitary napkin and hair oil products increasing its market share.

The Healthcare sector achieved a revenue growth of 22.1% to record Rs. 2.2 billion, driven by a successful quarter enjoyed by both its pharmaceutical distribution and hospitals businesses, giving rise to a growth in earnings of 22.7% to post Rs. 142 million. The Pharmaceutical business saw its market share grow to 17.32% (source: IMS) with a revenue growth of 20.8%.

“Our efforts in striving to excel in supply chain excellence were rewarded with two of our agencies Ranbaxy Laboratories Ltd. and Terumo Singapore Pte Ltd. winning the Best Supplier Awards at the SPC supplier convention 2012, held recently. Our hospitals business enjoyed a good quarter with both the hospitals recording the highest monthly revenues achieved since inception,” the Hemas CEO said.

“The growth in revenue was also strengthened by the success of our diagnostic network which enjoyed a growth in volumes during the quarter. Our commitment to service excellence has been reinforced with the hospitals being awarded the certification in International Standard for Occupational Health and Safety (OHSAS 18001) becoming the first internationally accredited hospital chain in Sri Lanka on occupational health and safety management systems and our laboratory network achieving the prestigious ISO 15189 certification, which is specifically aimed at standardising the quality and competence of clinical laboratories around the world. Construction of our third hospital at Thalawathugoda commenced during the quarter and we expect the facility to be operational by mid next year,” he added.

Hemas’ Leisure sector posted a revenue growth of 38.6% to record Rs. 289 million, largely driven by the Hotel sector. Esfually said the sector profitability was impacted by a weakening rupee resulting in exchange losses on foreign currency borrowings, although the majority of which were unrealised translation losses.

“All our hotels, Avani Bentota Resort & Spa, Avani Kalutara Resort, Club Hotel Dolphin and Hotel Sigiriya, received the TripAdvisor 2012 Certificate of Excellence award in recognition of their achievement of hospitality excellence,” he added.

The Transportation sector enjoyed a revenue growth of 25.3% to record Rs. 227 million, whilst sector earnings grew by 62.0% to Rs. 68 million. Aviation and Logistics services grew by double digits, supported by enhanced cargo volumes and new logistics contracts. The Malaysia Airlines GSA opened their second pioneering branch office in Matara in June.

“Our Maritime segment also grew with higher throughput handled along with enhanced ancillary services provided to vessels operating in the Ports of Colombo and Galle,” the CEO said.

The Power sector recorded a revenue growth of 52.3% led by an increase in revenue at the thermal power plant Heladhanavi due to the pass through effect of increasing furnace oil prices. However, sector profitability plunged by 54.4% to record Rs. 30 million due to exchange losses on foreign currency borrowings at Heladhanavi, a greater part of which was a result of translation losses, which had no cash flow implication. The low rainfall experienced by the hydro power plants continued to hamper sector profitability. The sector will continue to focus on new opportunities to diversify and grow the business.

“Whilst we have enjoyed a successful and an encouraging first quarter, medium-term business outlook remains challenging. However, we are optimistic of building on our current performance to maintain a healthy growth in business over the rest of the year,” the CEO added.