Hemas Group records Rs. 4.3 b operating profit for nine months | Sunday Observer

Hemas Group records Rs. 4.3 b operating profit for nine months

Hemas Group reported a consolidated revenue of Rs. 48 billion for the nine months ended December 31, 2018, recording a year-on-year (YoY) growth of 37.8%, primarily driven by its acquisition of Atlas.

Group operating profit stood at Rs. 4.3 billion, a growth of 45.8% over the previous financial year. The profit attributable to equity holders of the parent at Rs.2.5 billion is a YoY growth of 19.2%.

Hemas Holdings Ltd (HLL) delivered year-to-date organic revenue growth of 15.7% and a recurring organic operating profit growth of 2.6%, excluding Atlas performance and the disposal gain arising from the Galle Hospital divestment.

Organic profitability growth remains a challenge due to unprecedented rupee depreciation coupled with price controls at Pharmaceutical distribution and Morison.

Unrealised forex losses from the translation of foreign currency denominated loan at our Anantara Peace Haven Tangalle hotel made a negative contribution to operating profit of Rs.174 million, 5.7% of recurring operating profit,” Chief Executive Officer, Steven Enderby said in his review. The group has performed robustly during a period of unprecedented currency devaluation and political uncertainty.

“The macro environment was challenging during the quarter with significant currency depreciation impacting profitability and political uncertainty eroding consumer and business confidence. “HHL achieved higher revenue and profit growth primarily due to the solid performance at Atlas, during its critical Q3 peak season.

The quarter recorded a revenue and operating profit of Rs.18.0 bn and Rs.1.9 bn, a YoY growth of 46.8% and 92.6% correspondingly,” he said.

“Our consumer business recorded a revenue of Rs. 20.3 bn, indicating a YoY growth of 73.0%. Operating profit of Rs. 2.8 billion grew by 100.1% during the nine months ended December 31, 2018 compared to last year.

“Over 85.0% of the revenue growth was driven by Atlas, which performed well during its back to school season. We have seen sustained growth momentum in our domestic personal care segment year-to-date with many of our core personal care categories recording market share gains.

“We are also seeing the benefits of our profit improvement program initiated last year improving operating margins.

The performance in our Bangladesh personal care business is now stabilising with year-to-date revenues recording a modest growth of 4.4%. Profit growth continues to be a challenge due to new promotional campaigns to combat competition,” Enderby said.

Atlas has recorded a solid performance during Q3 with year-to-date revenues up by 13.0% over the same period last year.

Atlas market share increased in its core categories and has also seen growth in its new back to school segment comprising of school bags.The Healthcare sector achieved a consolidated revenue of Rs. 20.5 bn, a YoY increase of 23.6% while operating profit and earnings indicated a decline of 10.3% and 13.8% respectively.

Hemas pharmaceutical distribution operation registered strong revenue growth stemming from the latest addition of new principals last year. However, the impact of price regulation and significant currency depreciation continues to compress margins. Hemas Leisure, Travel and Aviation (LTA) sector achieved revenues of Rs. 3.1 bn, a growth of 19.3% for the nine months under consideration. Serendib Hotels recorded a strong quarter, with an average occupancy reaching 86% across its own managed hotels, 5% growth over same quarter last year.

Hemas Logistics and Maritime sector recorded a revenue growth of 6.3% over last year with revenues of Rs. 2.2 bn. During the period in review, Port of Colombo was ranked as the world’s fastest growing port with a growth of 15.6% in container handling during the first half of 2018, fuelled by 20% growth in transshipment volumes. Year-to-date profitability of the maritime sector increased as a result.

The technology business, N*able reported significant growth in the third quarter with increased revenues over last year by 81.1%.

However, profitability continues to be a challenge due to previously recorded losses during the first half of the financial year.