Hemas Holdings reports robust 3Q

Hemas Holdings yesterday reported its best quarter year-to-date with consolidated revenues of Rs. 5.3 billion, reflecting a growth of 15.2% year-on-year, and net earnings of Rs. 350 million, a growth of 12.6%.  CEO Husein Esufally said earnings growth during the third quarter was fueled by the Leisure, Healthcare and FMCG sectors, which grew by 170.6%, 33.3% and 22.2% respectively.

“Our Healthcare sector was the main contributor to the year-to-date performance with a revenue growth of 14.0% and earnings growth of 53.6%. Nine month earnings were mainly impacted by the underperformance of our Power sector, which is experiencing low rainfalls in the catchment areas. As a result, Group earnings for the nine months ending 31 December 2011 declined by 6.9% to Rs.  837Mn, despite our strong quarterly performance. However, the Group has sustained a healthy revenue growth of 16.6% year-to-date, to close at Rs.  15.3Bn,” Esufally added.

Hemas FMCG sector enjoyed a good quarter, recording a revenue growth of 17.0% to achieve Rs. 1.7 billion, whilst sector profits grew at 22.4% to end the quarter at 174 million.



Many of the categories we serve; lotions, shampoos, hair grooming and sanitary napkins, in particular, have grown at healthy rates during the year.

 “Our sanitary napkin brand, ‘Fems’ which was re-launched in November 2011 and ‘Kumarika’ hair oil were the front runners for the sector turnover growth,” the CEO added.

With our introduction of two new variants to Kumarika hair oil, the brand has strengthened its footing as the distinctive market leader in the category. During the quarter ‘Diva’ detergent powder was extended to the whitener category with its new extension ‘Diva White Power’. Raw material prices, which peaked at the beginning of the year, have been on a declining trend, helping Hemas profit margins to gradually improve.

According to the CEO the Hemas Healthcare sector continued to show a healthy performance recording a quarterly revenue of Rs. 1.8 billion (up 10.0% year-on-year) and quarterly earnings of Rs. 86 million (up 33.3% year-on-year). The strong performance of our Pharmaceuticals business helped maintain its leadership position in the industry with a market share of 16.65% (Source: IMS).

“Our hospitals in Wattala and Gallecontinue to enjoy increasing patronage amongst local residents. During the period our hospital in Galle introduced laparoscopic surgery, which has seen an increase in popularity while our diagnostic network expanded to include two new laboratories in Gampaha and Negombo including OPD consultation facilities. Our second phase of hospital expansion began during the quarter, with the commencement of project work for our third hospital in Thalawathugoda,” Esufally told shareholders in his review accompanying interim results.

The key highlight of Hemas Leisure sector was the reopening of Hotel Serendib under its new brand name ‘AvaniBentota’. The hotel was repositioned as a design hotel to offer its customers a unique ‘on the beach’ experience. The total project cost was Rs.  650 million and the hotel was closed for refurbishment from May to November 2011, as a result of which the quarterly revenues of the sector remained flat. However, excellent GOP margins by Club Hotel Dolphin, Hotel Sigiriya and Kani Lanka, coupled with gains due to exchange rate fluctuations resulted in a 170.6% growth in quarterly earnings.

Hemas Transportation sector achieved a revenue of Rs. 182 million for the quarter ended 31 December 2011, a marginal decline of 0.6% from the previous year, whilst profits dropped 9.8% to Rs. 58 million. “The drop was mainly attributable to the dip in cargo volumes of our aviation sector in line with the declining market, overshadowing the growth in the passenger sales market. Our maritime arm suffered a drop in volumes, due to the drop in trade activity in the region, whilst our out bound tour operation performed exceptionally well during the quarter with a high level of growth seen in the leisure travel market,” the CEO said.

The Power sector recorded quarterly earnings of Rs.  61 million, a year-on-year decline of 25.5%. Throughout the year, Hemas mini hydro plants experienced low levels of rainfall dragging the sector performance well below that of last year. “With our latest mini hydro plant in Magal Ganga, which was commissioned in September 2011, we have a total of 7MW in our renewable energy portfolio, in addition to the 100MW thermal plant. Our project development team is currently working on several new projects, with a view to expanding and diversifying our renewable energy portfolio,” Esufally said.

The Hemas CEO expressed optimism with regard to prospects for the remainder of the FY2012. “We are optimistic that the last quarter of 2011/12 will continue with the same momentum gathered during the third quarter. With improved sentiments in the consumer markets and the anticipated tourism peak in the winter season, we expect to close the year on a positive note,” Esufally added.