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Friday, 16 November 2012

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Hemas boosts operating profits by 51 %

Hemas Group posted revenues of Rs. 12.9 billion a growth of 29.0 % over the previous year. Main contributors were Power, Healthcare and FMCG sectors, which recorded growth levels of 50.4 %, 22.9 % and 17.2 % respectively. Group operating profits recorded a growth of 50.6 %, to post Rs. 1,036 million (as per SLAS) while earnings for the half-year was Rs. 705 million (as per SLAS), a year-on-year growth of 44.9 %. Earnings were driven by Transportation, FMCG and Healthcare sectors, whose earnings grew by 52.2 %, 39.6 % and 33.0 % respectively, and Leisure sector which posted earnings of Rs. 42.4 million as against a loss of Rs. 32.8 million last year.


Husein Esufally

The FMCG sector performed very well to record a top line growth of 17.2 % in a slowing market, to post Rs. 3.7 billion of revenues. Sector earnings were Rs. 358 million for the half-year, a growth of 39.6 %. Both revenues and earnings were driven by the strong performance of our Personal care and Personal wash categories. Many of the brands in these categories have seen increasing market shares during the period with Velvet succeeding to become the market leader in the beauty soap category. Escalating food prices during the quarter resulted in the slow growth experienced by the care market, a trend we expect to continue into the next quarter. Despite a slow market growth our personal care portfolio recorded a strong growth of 9.4 %, helped by our baby care, oral care and hair care categories.

Our flagship brandBaby Cheramy celebrated its 50th anniversary with the launch of Big Heart Project together with the Department of Probation and Childcare Services of the Ministry of Child Development & Women Affairs to fund the education of disadvantaged children from across the country during the crucial first five years of schooling. The project will specifically fund children that are ‘at-risk’, or in danger of being institutionalized due to the financial inability of their families’ to care for them. Our sanitary napkin brand, Fems won the Silver Award for the Best Turnaround Brand of the Year, while our adult personal wash brand Velvet, secured the Bronze Award for the Product Brand of the Year at the 11th SLIM Brand Excellence Award Ceremony held recently.

Our Healthcare sector continued the growth it has been enjoying in the recent past during the first two quarters of the current year as well. Revenue and earnings growth was primarily driven by the performance of our Pharmaceuticals business, which benefited from the healthy growth of the market to post an increase in top line of 21.9%. During the period under review the business successfully grew its market share to 17.6%(Source: IMS),further strengthening its market leadership position. Despite the negative impact caused by the depreciating currency the business posted a healthy profit growth of 27.0%. Our Hospitals business experienced a good half-year with inpatient capacity nearing 80%at Wattala hospital, contributing to the increase in Hospital revenues of 30.3% to Rs. 660Mn. During the year our hospitals continued its efforts to create awareness amongst the community as well as educating and training doctors on colon cancer, ophthalmology, chest infections and ENT diseases. These activities together with our high service standards helped the business achieve higher surgery volumes recorded since inception and enhance volumes of our laboratory, which helped the business close the half year recording an EBITDA growth of 41.2%.

The Leisure sector enjoyed a good first half by recording a revenue of Rs. 656Mn, a growth of 44.9%. The performance of Hotel Dolphin helped the sector swing its earnings from a negative Rs. 33Mn to a positive Rs. 42Mn. The soft opening of Kani Lanka took place in September, rebranding it under the Avani umbrella as AvaniKalutara. Our hotels experienced a good first half recording an overall occupancy in excess of 70%, in a period which was predominantly the ‘low season’ and are looking forward to an exciting winter season. The sector’s performance was enhanced by our inbound tour operation, which recorded atop line growth of 34% for the period, largely driven by increasing volumes.

The Transportation sector posted a top line of Rs. 465Mn,a 29.4% growth over the previous year. This was mainly on account of strong revenue growth in the aviation and maritime segments. Sector earnings rose by 52.2% to Rs. 155Mn during the first half of 2012.

Our Aviation segment recorded satisfactory growth in passenger and cargo sales while our outbound tour operation too increased their share of the travel agency market. Our maritime segment’s performance was aided by increasing throughput volumes of our feeder business.

The sector diversified its presence in this segment to handle casual callers and provide maritime services through our joint venture with Mercantile Shipping Company PLC which is expected to commence operations in the third quarter. Despite the growth of the maritime and aviation segments, our performance in the logistics segment was challenging.

In September this year, we made an investment in Forwardair Logistics (Pvt) Ltd, strengthening our presence in this segment and allowing us to leverage our existing relationships in the industry for further growth.

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