Hemas revenue grows but operating profit down amidst acquisitions, expansion
View(s):Hemas Holdings PLC (HHL) has reported full year consolidated revenue of Rs.50.9 billion, an increase of 17.2 per cent over last year for the year ended March 31, 2018.
Steven Enderby, Hemas Group CEO, in the report, said FY 2018 has been challenging, with robust revenue growth in tough economic conditions and depressed earnings being seen throughout the financial year. “Investing for a better future is a priority and we have made significant investments and acquisitions,” he added.
Revenue growth was primarily driven by enhanced performance in its healthcare and mobility sectors. HHL registered an operating profit of Rs.4.2 billion during FY 207/18, a 11.3 per cent YOY decline together with earnings of Rs.2.7 billion, 23.0 per cent YOY decline. “Adjusting for our investments in growing our businesses, the Atlas acquisition and asset disposals indicate a revenue growth of 14.9 per cent while operating profit and earnings remained flat,” the company said in a media release.
“We have made significant investments in growing our businesses which have reduced our operating profits for the year. These have included, commencing Home and Personal Care (HPC) operations in West Bengal, India, investments in digital health start-ups, and a major profit improvement project for our Home and Personal Care business. These investments have reduced operating profit by Rs.397.9 million,” it said.
The company acquired Atlas Axillia, Sri Lanka’s leading school and office stationery business, in January 2018. The seasonal nature of this business with Q4 of the financial year being low season coupled with the loss of interest income from rights issue proceeds and other cash reserves used to fund the acquisition impacted the company performance.
The consumer sector comprising of Home and Personal Care and School and Office Stationery posted a revenue of Rs.17.4 billion, up by of 8.6 per cent over the previous financial year.
HPC Bangladesh restructured its sales and distribution network which had an impact on sales growth and profitability compared to the previous financial year.
Continuous investment behind the brand has been made as the competitive intensity in the market has increased.
The healthcare sector delivered strong financial performance registering a consolidated revenue of Rs.23.1 billion, a YoY increase of 22.6 per cent, driven by the performance of the pharmaceutical distribution and hospitals. However, profitability in pharmaceuticals remains challenging due to price regulation and devaluation of the rupee, Hemas noted.
The company’s logistics and maritime recorded revenue growth of 45.7 per cent over last year with revenues of Rs.2.8 billion. During the year, Spectra, Hemas’ logistics joint venture with GAC and McLarens has shown improved results, mainly driven by the 3PL operations.
The leisure, travel and aviation (LTA) business posted a total revenue of Rs.4.2 billion, down by 3 per cent over the last financial year. “Overall profitability of the LTA sector continued to be below expectations stemming from poor performance in our inbound travel arm primarily caused by a contraction of its Asian market segment and compounded by a decrease in arrivals during the summer. Serendib Hotels improved performance in Q4 by attracting higher volumes during the peak season. Anantara Peace Haven Tangalle performed comparatively better than last year, however losses incurred year-to-date have impacted group profitability,” the report said.