Hemas posts Rs 10b turnover in first half

For the six months ended September 30, 2011, the Hemas Holdings grew its topline by 17% to record a consolidated turnover of Rs 10.0bn. Revenue growth was driven by Leisure and Power sectors, which posted 37% and 31% increases in revenue respectively. Group gross profit showed a growth of 9%, reflecting a marginal decline in the gross profit margins to 31%, from 33% achieved the previous year.

This was largely due to the increase in raw material prices of our FMCG sector and the pass-through effect of higher oil prices in the Power sector.

Group earnings declined by 17% to close at Rs. 486mn. However, after adjusting for one-off items during the first half of 2010/11 and the first half of 2011/12, Group earnings have declined only by 9%, CEO Husein Esufally said.

FMCG sector recorded a turnover of Rs 3.1bn, a growth of 8% over the previous year. Kumarika was relaunched during the period under review, with new variants and improved packaging, whilst the brand also introduced a Face wash as a first step towards building a franchise in the fast growing skin cleansing market.

It was heartening to see Diva Detergent soap, win the Bronze award for the Best new entrant of the year at the recently concluded SLIM Brand Excellence awards.

Although the sector profits dropped by 13% during the first six months, the three months ended September 30, 2011 saw an 8% growth in earnings. The Quarter performance was fuelled by strong earnings growth of 15% in the domestic business, Esufally said.

The Healthcare sector has seen an inspiring first half with a revenue growth of 16% to record Rs. 3.6bn and a profit growth of 81% to record Rs 190mn. Our pharmaceutical business has seen a top line growth of 15%, largely driven by the growth in industry.

The company continues to remain in the lead with a market share of 16.75% (IMS, Q2-2011). Strong focus on operational efficiencies and processes has enabled us to manage the overheads whilst benefiting from a growing topline. Our hospitals too have seen an impressive growth in topline of 25%.

Whilst we have further strengthened the hospital lab chain by setting up a branch of the Hemas Hospital laboratory at Ja-Ela during the quarter, we also intend expanding our footprint by developing two new hospitals in the near future, in the suburbs of Colombo.

In our Leisure sector, Hotel Dolphin and Hotel Sigiriya have been performing exceptionally well, but the closure of Hotel Serendib, on account of repositioning it as a design hotel, has impacted the results during the first half. The sector achieved a revenue growth of 37%, but showed a decline in profits to record a loss of Rs 23mn.

In additional to the closure of Hotel Serendib, the negative growth over last year was also impacted by the capital gains on the sale of shares of Hotel Sigiriya that took place during the corresponding period last year.

On average, our hotels recorded occupancy rates in excess of 70% and we look forward to a good winter complemented by the reopening of Hotel Serendib in November.

Our Transportation sector showed a 4% decline in topline to record Rs 359mn and a decrease in profits of 23% to close at Rs 102mn. Despite the overall decline in the cargo market, the steady growth in the passenger business, both in Travel Agency and Airline Representation has been the key positive factor in the sector.

Our Power sector recorded a growth in revenue of 31% to close at Rs 2.1bn brought about by the pass through effect of high furnace oil prices and higher generation at Heladhanavi in comparison to the previous year. The hydropower plants recorded low utilization levels as a result of poor rain fall experienced in the catchment areas contributing to lower sector profitability of Rs 165mn, a drop of 19%.

The hydropower contribution to profitability decreased to 23% from 45% recorded the previous year, whilst the contribution from our thermal power plant was boosted by the financial restructuring that took place during the latter half of the second quarter the previous year.

Our third hydropower plant at Magal Ganga was commissioned in October this year adding another 2.4 MW to the portfolio taking the total hydropower generation capacity to 7.0mw.

The sector is looking out for new opportunities in renewable energy both locally and overseas, particularly in East Africa.