Coronavirus affects business but Softlogic can benefit from healthcare
View(s):With the outbreak of the coronavirus, Chinese tourists have declined sharply and this would affect the business of the Softlogic Group in the forthcoming quarter, according to Group Chairman Ashok Pathirage
In his statement on the group’s 9th month results ending December 2019, Mr. Pathirage said that heavy investments in retail, healthcare and other sectors have been made during the year despite the challenges of poor market sentiments, waning consumer demand and the shock of the Easter attacks.
“This involves courageous leadership which foresees that with the new political equation the economy would be galvanised with tourism occupying a major thrust in the government’s agenda for ensuring that the country becomes a regional shopping destination. Notwithstanding this, the unforeseen coronavirus would no doubt impact global tourism. The psychological pandemic, nonetheless, would have to be controlled with a sense of urgency. Softlogic would be an immediate beneficiary of a resurgence in tourism which has in recent times proved encouraging for our leisure and retail sector. On the other hand, any pandemic of significance would result in the healthcare sector becoming indispensable for the country,” he has said in the statement.
Consolidated group turnover significantly increased by 11 per cent to Rs. 59.4 billion during the first nine months of this financial year while quarterly revenue improved 14 per cent to Rs. 22.2 billion.
Group’s efforts to restore consumer and business confidence during the period was augmented by expanding the international branded retail portfolio and upmarket stores at One Galle Face by Shangri La along with the Odel Flagship department store which “distinctly fosters a class of its own, standing shoulder-to-shoulder with reputed marques thereby enhancing customer shopping experience manifold”.
In the same way, the healthcare sector, with the addition of Asiri’s 190-bed ultra-modern hospital in Kandy, will have an important role to play in the country’s healthcare serving the healthcare needs of the Central Province given its reach to the untapped regions of Northern and Eastern Provinces.
“Despite the new investments, we are still recovering from the shock of the April incidents and will have to bear the consequence of the uncertainty of the coronavirus and its implications together with the General Election in the offing,” he said.
Nonetheless, he pointed out, the new Government’s pro-business decision to reduce the tax burden for corporates while also reducing interest rates will give a significant filip to future earnings.
Group turnover was dominated by the rapidly expanding Retail sector (51 per cent contribution to Group topline), Financial Services (20 per cent) and Healthcare Services (20 per cent) while the IT, Leisure and Automobile collectively made up 10 per cent of group topline.
Gross profit grew 11 per cent to Rs. 21.7 billion during the 1-3QFY20. The quarter reported a gross profit of Rs. 8.4 billion (up 15 per cent) maintaining GP margins at 38 per cent amidst Softlogic’s expansion drive whereby synergies are created.