Hemas Holdings posts impressive results for 9 months

Hemas Holdings PLC (HHL) and its subsidiaries have achieved consolidated revenues of Rs.28.3 billion, year-on-year (YoY) growth of 19.7% for the nine months ended 31 December 2015. 

During this period operating profit reached Rs.2.8 billion and earnings Rs.1.9 billion, growth of 25.6% and 65.2% respectively. Eliminating the one-off transactions in the preceding year and the additional interest income of Rs.196 million earned from investing the proceeds of the rights issue, underlying operating profit and earnings maintained a healthy growth of 30.8% and 30.2% respectively.

“We continue to work hard to try and sustain our strong growth in the final quarter of the financial year and achieve our highest ever levels of revenue and profitability, “ Hemas Holdings CEO Steven Enderby said.

Following is the detailed review from the CEO on the sectoral performance of Hemas Holdings.

The FMCG sector achieved total revenues of Rs.11.2 billion for the nine months, a 24.4% YoY increase over the previous financial year. Operating profits were Rs.1.4 billion, 54.4% YoY growth, whilst earnings grew at 32.9% to stand at Rs.1.1 billion. Excluding the one-off capital gains recorded the previous year, underlying earnings growth was 49.3%. This performance has been driven by Hemas’ Bangladesh operation maintaining excellent revenue and profit growth, strong sales across all Hemas’ major brands in the domestic market and relatively weak commodity prices for key raw material inputs.

Overall healthcare sector revenue for the nine months under review stood at Rs.11.9 billion, a YoY increase of 18.3% whilst earnings grew at 25.8%. During the quarter, Hemas Hospitals opened its first wellness centre at Orion City responding to a call to provide top quality healthcare services to the 6,000 plus employee strength, at Colombo’s premier IT park. This marks another novel concept by Hemas Hospitals in the development of the Sri Lankan healthcare industry. The hospital’s growth in revenue contributed 31.0% of the overall segments revenue growth. Hemas pharmaceutical distribution operation registered a YoY topline growth of 12.1% maintaining its market leadership position. Hemas’ pharmaceutical sales growth continues to be driven by a strong presence in growing therapeutic segments.

J. L. Morison posted a YoY growth of 28.6% and earnings growth of 71.7% for the nine months ended 31 December 2015. Revenue growth was largely driven by the increase in sales from the buyback arrangement with the Government of Sri Lanka and sales growth in key diagnostics agencies. The significant growth in operating profit resulted from the increases in revenues in both consumer/OTC products and pharmaceuticals segments and last year’s earnings being depressed by closure of the factory in Q1 FY 2014/15.

The transportation sector reported a revenue of Rs.1.3 billion, a 15.2% YoY topline growth. The increase in revenue resulted from growth in domestic logistics and maritime operations with warehouses operating at high levels of capacity, new customers for the Hemas  distribution operation and higher levels of container handling and repair activity. Aviation businesses continued to experience challenges due to lower yields of ticketing income despite increases in volumes. Triggered by limited revenue growth from the aviation segment, the transportation sector registered an operating profit of Rs.271million indicating a de - growth of 6.1%.

During December, the Hemas leisure sector opened its newest hotel property, Anantara Peace Haven Tangalle Resort. It is  believed that this property will establish a new benchmark for luxury travellers to Sri Lanka seeking authentic cultural experiences. The hotels first month of operation has been encouraging. The leisure segment recorded a total revenue of Rs.2.2 billion, reflecting a 9.2% YoY growth for the nine months under consideration. Serendib Hotels posted a revenue growth of 11%, driven by strong performances from AVANI Bentota and Hotel Sigiriya with an overall occupancy of 78%.

Finally in technology, N-Able posted a YoY revenue growth of 21.3%, although in spite of the revenue growth, earnings were impacted by project delays and high operational leverage.