Hemas says inflation deters consumer spending in 2007

Hemas Holdings, despite the adverse effects of reduced consumer spending and depressed margins, recorded a turnover of Rs 3.57 billion for the quarter ended September 2007 reflecting a year on year growth of 12%.

But the company is urging the government to take measures to rein in inflation which has significantly impacted consumer spending. Husein Esufally, CEO Hemas in his statement has said that higher input costs, increased costs of distribution and sustained high interest rate scenario, impacted operating margins for the quarter which declined to nine percent from 14 percent during the same period last year. Operating profit closed at Rs 322 million for the quarter, down by 27% compared to the corresponding period last year.

Esufally has noted that for the quarter under review the FMCG sector recorded a turnover of Rs 1.04 billion, which reflects a marginal decline vis-à-vis the corresponding quarter last year. Profits for the quarter declined to Rs 100 million compared to Rs 132 million in the same period last year. “This is attributed to the increase in a few key ingredients as well as general cost increases which could not be passed on. Price adjustments have now been made in line with the market, and margins in the subsequent quarter are expected to improve,” Esufally has noted.