Like Softlogic, healthcare ‘heals’ many corporate bottomlines
View(s):Softlogic Holdings, Sri Lanka’s fast growing and newest conglomerate aiming for stakes as high as John Keells, Hayleys or Aitken Spence, is realising – like many other groups exposed to healthcare services that healthcare is becoming its top earner.
Announcing the group results for the quarter ending June 2017, its chairman Ashok Pathirage said that the healthcare sector was a key contributor to the gross profit growth with increasing demand and bed occupancy in the company’s four hospitals augmenting performance in an unprecedented manner.
Operating profit for the sector rose by 34.5 per cent to Rs. 1.8 billion during the first three months of the financial year.
Healthcare industry analysts said that the crippling dengue outbreak resulted in patients not only crowding state hospitals but also private hospitals with no beds to spare at Nawaloka, Asiri Central, Durdans or Lanka Hospital. The dengue outbreak has eased in the past few weeks.
With three hospitals in Colombo – Central, Asiri Hospital and Asiri Surgical -, the company is also constructing a 150-bed hospital in Kandy which is set to open next year.
In a detailed summary of the group’s accounts for the latest quarter, Mr. Pathirage said in his review that revenue rose by 6.2 per cent to Rs. 15.2 billion against the end June 2016 quarter. Growth was resilient despite tightened monetary policy, contracting purchasing power, and inclement weather, all contributing to lackluster demand.
While retail, ICT, healthcare services, financial services and automobile were the main contributors to the topline, the leisure sector was expected to improve its contribution and reduce its overall losses in the periods to come with “Mövenpick Hotel’s monthly trajectory of occupancy improving as anticipated while intermittent full occupancy in today’s context in both hotels – Centara Ceysands Resort and Spa and Mövenpick Hotel Colombo– augurs positively for the sector”, he added.
Gross profit improved strongly by 21.2 per cent to Rs. 5.4 billion while post-tax profit was virtually unchanged at Rs. 430 million vs Rs. 428 million.
The group’s retail sector revenue was Rs. 4.8 billion and driven mainly by ODEL and Softlogic retail network.
“A new Odel wing with store space of 10,000 sq. ft will be opened during August 2017 (this month) introducing several other leading international fashion brands,” the chairman said.
The Burger King operations reported good earnings during the quarter after opening an outlet in Malabe in July taking the total reach to 16 locations.
Strategy to rebuild the Baskin-Robbins brand is being executed with refurbishment of its four ice-cream parlours, he added.
The consumer electronics network stands with 219 stores around Sri Lanka with the latest store being opened in Ja-Ela.
ICT sector revenue declined during the quarter owing to the interruption of the ‘Nokia’ business, he said, noting however that the new range of Nokia handsets with Android Operating System has already been launched and is expected to add to topline and profitability during the year. The company also launched ‘Intex’, a leading Indian mobile handset brand.
“In a difficult operating environment, consolidation and cost discipline are key to progress and sustainable returns. What requires improvement is the leisure sector’s macroeconomic fundamentals, but occupancy rates are moving in the right direction at our hotels which will ensure those startup costs are recovered much faster than projected. Furthermore, we expect interest rates to fall in line with fiscal discipline thereby this would further improve the group’s overall performance. With Softlogic’s diversified portfolio, sustainable value creation hinges on sound macroeconomic fundamentals and policy consistency,” Mr. Pathirage said.