Hemas Holdings PLC (HHL) recorded a consolidated revenue of Rs.13.5 billion for the first quarter ended June 30, 2018, a year-on-year (YoY) growth of 21.3%, led by higher contributions in our consumer and healthcare sectors, Chief Executive Officer, Steven Enderby said in his review.
The Group operating profit at Rs. 895.7 million in the first quarter of the financial year was an increase of 3.5% over the previous financial year. Operating profit growth has been impacted by losses at N*Able, our IT technology solutions business, coupled with a weaker macroeconomic environment with sluggish consumer demand as disposable incomes have been dampened by rising costs from Rupee depreciation and increased taxes, he said.
The profit attributable to equity holders of the parent at Rs.554.3 million is a decrease of 20.2% in the corresponding period of the previous financial year.
This is due to reduced interest income post utilisation of cash reserves to acquire Atlas in January 2018 and increased interest costs relating to higher working capital due to strong growth in Pharmaceutical Distribution and the loan financing for our new logistics park.
All three of these investments should contribute to earnings from Q3. Excluding the first quarter performance of Atlas, HHL recorded a revenue and an operating profit growth of 10.9% and 1.5% correspondingly.
“Our consumer business revenue stood at Rs.5.4 nn for thet hree months ending June 30, 2018, indicating a YoY growth of 36.2%. Growth in the consumer sector excluding Atlas stands at 6.8%.
“Operating profit of Rs.569.3 mn grew by 8.1% during the quarter.Market conditions domestically remain depressed with most market commentaries indicating low or negative growth in most major FMCG categories. “Against this backdrop, our business has performed well. Our Bangladesh business experienced revenue growth of 6.1% following the Kumarika relaunch last December.
“However, profitability still remains a challenge due to heavy marketing spend post launch. Atlas performance has been on track in Q1 with revenues up by 8.8% over last year and break even in operating profits in line with its normal seasonal performance trend.” Consolidated healthcare sector revenue for the first three months under review stood at Rs.6.4Bn, a YoY increase of 24.7% whilst operating profit and earnings indicated a decline of 2.0% and 6.0%.
Hemas pharmaceutical distribution operation registered strong revenue growth. However, managing the impact ofprice regulation and devaluations in the wake of depreciation of the rupee was a key operational challenge.
Hemas Hospitals achieved an overall occupancy of 60%, recording a satisfactory performance. Revenues and profitability were flat compared to Q1 last year when occupancy levels were higher due to the dengue epidemic.
Morison posted a revenue of Rs. 844.3 mn and operating profit of Rs. 83.0 mn for the three months ended June 30, 2018.
Morison’s underlying revenue, excluding Alcon distribution business, which we exited during the latter part of FY2017/18, was 4.2% while the earnings recorded a decline of 31.5% primarily due to increased operating costs.
Hemas Leisure, Travel and Aviation business recorded a revenue of Rs.792.4 mn, reflecting a growth of 16.2% for the three months under consideration.