March 11, 2024
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7min

• Topline increases by 14%
• Foreign revenue up by 87%
• Bangladesh Alkyd Manufacturing Plant commences operations
• Sri Lanka Binder Manufacturing Plant near completion
• Expansion into Australia through the furnishing sector

Sri Lanka’s market leader in wood coatings and paint brushes, and emerging regional conglomerate, JAT Holdings PLC recently released its financials for Q3 of FY 2023/24, reflecting a resilient performance amidst adverse market conditions. With its operations in Bangladesh seeing continued expansion, including the opening of its manufacturing facility in 2023, and its alkyd resin plant in 2024, supported by cutting-edge R&D and value engineering in Sri Lanka, JAT has established itself as a leader in wood coatings in the region. Accordingly, during Q3, JAT Holdings PLC recorded its highest-ever export turnover at Rs. 2,822 million, an 87% leap from Rs. 1,511 million recorded during the comparable period in FY 2022/23, while export sales margins too improved. Revenues were up by 14% to Rs. 7,887 million from Rs. 6,945 million in the corresponding period in the year prior. JAT’s Alkyd Resin Plant in Bangladesh, now fully operational, is expected to further boost the Bangladeshi operation’s bottom line into FY 2024/25.

 



 

Local paint sales too rose by 14% in the period under review, against the comparable period in the year prior. However, project revenues noted a dip owing to a slowdown in the construction sector. While the macro economy is turning around, and most import restrictions have been lifted, disposable incomes continue to decline as a result of high taxes and inflation, presenting both challenges and opportunities. However, several projects undertaken by JAT Holdings PLC are nearing completion and these may likely provide a healthy boost to local revenues in Q4 of FY 2023/24. As a result of these ongoing challenges, local revenues noted a contraction of 7% to Rs. 5,066 million, from Rs. 5,433 million in the corresponding period in the year prior.

Meanwhile, owing to the challenging business environment, contracting Sri Lankan economy, and foresighted strategic manoeuvring by JAT Holdings PLC, the Group’s gross profits noted a marginal contraction of 5% to Rs. 2,295 million, from Rs. 2,409 million in the comparable period of FY 2022/23. Driven by an inflationary environment and subdued demand, local, operating profit also noted a contraction of 38% to Rs. 871 million, from Rs. 1,401 million in the comparable period of the year prior. Furthermore, as a result of strategic consolidation, adverse market conditions, increased advertising costs to further consolidate brand equity, and significant investment into transnational operations and customer loyalty, sustainability, and community development programmes, profit before tax (PBT) also witnessed a contraction of 36% to Rs. 755 million, from Rs. 1,188 million in Q3 of the previous year. Accordingly, profit after tax (PAT) too was curtailed, recording a contraction of 42% to Rs. 576 million, from Rs. 987 million in the corresponding period of the year prior, hampered further by a higher tax regime than the previous quarter.

Discussing the Group’s financial performance, CEO, Nishal Ferdinando said, “Understanding the challenges consumers face, we have invested heavily into promotional efforts, and our social and sustainability programmes such as Pintharu Abhiman, which is conducted in partnership with NAITA, and with the support of Sirasa for wider coverage. These efforts, combined with the challenging business environment, have impacted our bottom line. However, we believe that they will empower us to sustain and grow market share as conditions become more favourable. Furthermore, we have invested heavily in expansion into foreign markets, particularly in Bangladesh, where we have made quantum leaps forward with our manufacturing plants for goods and raw materials, making for enhanced vertical integration, and thus efficiency. In addition to this, we have been focused on our operations in Africa via JAT Paints Africa Ltd and improved forward vertical integration through showrooms in the Maldives, Bangladesh and Australia. Our focus has also been heavily on digitalisation for more oversight and control over our value chains and increased administrative, manufacturing, and technical efficiency. We believe these measures will give us an edge as business conditions improve.”

Managing Director of JAT Holdings PLC, Aelian Gunawardene added, “In coping with and responding to the dynamic and challenging business conditions, the board has directed the company towards a focus on export expansion, together with increased efficiency, automation and improved cost management. Our goal is to maintain positive cashflows and liquidity, whilst consolidating our financial position, as this will provide us with a significant advantage when conditions improve. In the meantime, we have taken strong measures to maintain the loyalty of our customer base, while also continuing to provide various financial and other relief schemes to our people to help them cope with the inflationary environment and the rising cost of living. Thus, we believe we are now poised to take full advantage of the emerging economic recovery and continue to deliver exceptional value to our customers and stakeholders.”

 



 


March 4, 2024
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4min

The SLT Group’s financial results for the fourth quarter and financial year ending December 31, 2023, reflects a downturn in performance amidst a turbulent macro-economic environment in the country.

For 4Q 2023, SLT Group reported a year-on-year consolidated revenue degrowth of 7.5% amounting to LKR 26 billion compared to LKR 28 billion in 2022. The Group’s profits decline was attributed to reduced revenue, despite the efforts of cost optimization measures that resulted in a 5.9% reduction in Operating Expenses (Opex). Consequently, the Group saw a corresponding decline in operating profit, with both Profit Before Tax (PBT) and Profit After Tax (PAT) experiencing decreases in the quarter.



 

At SLT level, a 3.6% Opex reduction was posted for 4Q 2023 compared to 4Q 2022, attributed mainly to a well-managed cost reduction in staff costs. Further, SLT saw cost savings in other areas credited due to a reduction in advertising and activation costs, with repair and maintenance costs also decreasing during the latter part of 2023. However, these savings were outweighed by a fall in the top line and increase in depreciation, driving overall losses.

Overall, in the financial year of 2023, the Group’s operational costs rose by 9.4% to LKR 74 billion compared to LKR 68 billion in 2022, mainly due to increased electricity tariffs. Additionally, other costs, including, annual maintenance contract costs, vehicle hiring, fuel, and repair costs, contributed to the overall cost increase year-on-year.

Furthermore, over the twelve-month period of 2023, the Group experienced a loss of LKR 3.9 billion, contrasting sharply with the profit of LKR 4.8 billion recorded in 2022, reflecting a staggering decline of 182.3%. Similarly, SLT and Mobitel individually reported losses of LKR 1.1 billion and LKR 3.6 billion for the year, respectively. Additionally, the Group’s revenue experienced a marginal degrowth of 1.2%, amounting to LKR 106.4 billion, compared to the revenue of LKR 107.7 billion in the financial year of 2022.

Offering a positive trend compared to 3Q 2023, the Group recorded a 13.2% reduction in Opex from 3Q to 4Q and a decrease in net losses from LKR 1.5 billion in 3Q to LKR 1.2 billion in 4Q. Moreover, the Group recorded an operating profit of LKR 549 million in 3Q 2023, followed by a surge to LKR 1.2 billion in 4Q 2023, indicating optimistic future forecasts.

Despite the performance decline over previous year, Mobitel showed a 3% growth in revenue and improvement in profitability parameters in the second half of 2023 over the first half of the year. The EBITDA reported a 9% growth and operating loss have reduced by 54% during the period as a result of company’s top line growth and cost optimization efforts.

Janaka Abeysinghe, CEO, SLT-MOBITEL noted, “Looking ahead, macro-economic uncertainty persists. Despite the year-on-year decline in profitability, we are optimistic and see encouraging signs for 2024. Our cost base is under continuous review and adjusted to match market conditions. Given these fundamental strengths, we believe we will overcome negatives in these challenging markets and are confident in driving the long-term profitability of the Group”.

The Group remains committed to financial prudence and business continuity while hoping for improved economic forecasts ahead.



 


February 28, 2024
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7min

February 28, 2024: Softlogic Life, recorded robust FY23 performance, posting Gross Written Premium (GWP) of Rs. 26.3 Bn for the period ended 31st December 2023, with an increase in top-line growth of 14% versus the past year and compared to industry growth of 12%. The Company has stood firmly with its policyholders in the face of challenging macroeconomic conditions with a firm commitment to continually improve customer benefits and this commitment is signified through their diligent Claims and Benefits payout during 2023 which is Rs. 13.5 Bn compared to Rs. 9.1 Bn in 2022.

During the period under review, Softlogic Life’s market share grew to 17.2% with the Company ranked as the second-largest life insurer in the market having overtaken much older players to establish strong growth momentum. The company reported a 10-year GWP Compound Annual Growth Rate (CAGR) of 26% compared with the industry’s 10-year GWP CAGR growth of 14%. Softlogic Life notes that its contribution to increasing insurance penetration in the country has increased significantly with the Company recording more than 700,000 active policies that have covered more than 1.3 Mn Sri Lankan lives. The Company stands at the pinnacle of its desired position leading the health insurance market share of 35%.

 



 

The company recorded an impressive Return on Equity (ROE) of 23%, whilst maintaining this performance and exceeding the 20% mark for the past five years. Profit after tax (PAT) for the year was Rs. 2.8 Bn, and Profit before tax (PBT) stood at Rs. 3.2 Bn. Total assets of the Company stood at Rs. 51.3 Bn, while total equity was recorded at Rs. 13.3 Bn with an impressive growth of 22.6%. Furthermore, financial investments of the company stood at Rs. 43.5 Bn which is 84.8% of the total assets of the company.

Furthermore, company’s investment income recorded in 2023 stood at Rs. 7.9 Bn which is an impressive growth of 55% compared to 2022 which also resulted increase in a total net revenue up to Rs. 31. 8 Bn which is a 25% growth compared to 2022.Softlogic Life’s stellar performance in 2023 underscores the company’s superior financial strength and resilience in navigating challenging macroeconomic conditions maintaining a healthy Capital Adequacy Ratio (CAR) of 367% which is well above the regulatory requirement of 120%.

Despite the intricacies and turbulence of the economic landscape, the 14% increase in top-line is in stark contrast to the negative growth of the economy and showcases Softlogic Life’s unwavering commitment to increasing value and delivering stability for its policyholders and all other stakeholders. The growth further demonstrates the company’s ability to weather economic challenges and reinforce its promise to prioritize the wellbeing and financial security of its policyholders’, solidifying Softlogic Life’s position as a trusted and dependable life insurance partner.

Ashok Pathirage, Chairman of Softlogic Life Insurance PLC, stated “In the face of a challenging business landscape, Softlogic Life has not only maintained but strengthened its position as the second-largest life insurance company in Sri Lanka with an increase in market share. These achievements are a testament to the effectiveness of the company’s strategic initiatives and the robust execution of those strategies. Softlogic Life is poised for continued success, and I am confident in the company’s ability to overcome challenges and seize opportunities in the dynamic landscape of the life insurance industry.”

Softlogic Life has been at the forefront of transforming the life insurance landscape in Sri Lanka. A pioneer in disruptive innovation and digitalization, the company has consistently sought to elevate the quality of life for Sri Lankans. Industry-first initiatives, including AI powered one-day automated claims settlement, 1-minute hospitalization claim settlement, a 100% digitalized sales platform, automatic policy issuance, and mobile-based micro-products, exemplify our commitment to providing a superior customer experience. These innovations have set new industry standards and played a pivotal role in strengthening Softlogic Life’s competitive position. Softlogic Life’s success extends beyond operational excellence, with unprecedented success at prestigious 58th CA Sri Lanka TAGS Annual Report Awards, Softlogic Life were placed overall second for consecutively third year and CMA Integrated Reporting Awards emerged as Overall Winner.

Softlogic Life Managing Director Iftikar Ahamed commenting on the performance noted that: “In a challenging year, Softlogic Life has not only weathered the storm but also emerged stronger, thanks to our forward-looking business strategies and customer-centric innovations. This growth is not just a numerical achievement but a reflection of our commitment to the financial well-being of our policyholders. As we navigate the complexities of the market, Softlogic Life remains steadfast in our commitment to serving and creating value to our policyholders, providing them with the security and support they need. We view these challenges as opportunities for growth and innovation. We have already had a great start to 2024 and I am confident that our resilient and proactive attitude will continue to drive the success of Softlogic Life.”

 



 


February 27, 2024
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4min
  • Asset growth 24% to LKR 516Bn
  • Operating Income growth 16% to LKR 45Bn
  • Stage 3 loan ratio reduced to 2.34% highlighting quality of loan portfolio
  • Strong Liquidity and Capital Adequacy Ratios at 45% and 19.68% respectively

26th February 2024, Colombo – Nations Trust Bank reported strong performance to close the financial year ending 31 December 2023, demonstrating steady growth amidst prevailing macroeconomic conditions. The Bank’s ability to navigate these challenges while maintaining a strategic focus highlights its commitment to delivering value to all stakeholders.

Director and Chief Executive Officer of Nations Trust Bank, Hemantha Gunetilleke, said, “We are pleased to announce strong results for the financial year ending 31 December 2023, showcasing consistent growth across our customer segments and notable increases in market share. The Bank’s success stems from its ongoing commitment to digital empowerment, resilient risk management strategies, and a solid capital foundation, complemented by substantial liquidity reserves.”

 



 

Maintaining a robust liquidity position remained a priority for Nations Trust Bank with the consolidated liquid asset ratio strengthening further to 45.03% as of end-2023, well above the statutory minimum requirement. The Group’s Tier 1 and Overall Capital Adequacy ratios improved to 18.14% and 19.68% respectively, as of year-end, comfortably above the regulatory requirement.

Interest expenses rose moderately, driving a 19% increase in net interest income supported by timely repricing of assets and liabilities. Net fee and commission income grew on increased credit card spend, while trade finance and cash management services held steady. The Bank’s consolidated interest income rose 30% to LKR 70.55 billion in 2023, enabled by loan growth and returns from investments in government securities.

Continuing its strong financial performance, the Bank posted Operating Profit Before Taxes of LKR 23.4 billion, a growth of 74% and a Profit After Tax (PAT) of LKR 11.4 billion, a YoY increase of 59% for the 12 months ending 31 December 2023.

Nations Trust Bank PLC serves a diverse range of customers across Consumer, Commercial and Corporate segments through multi-channel customer touch points spanning both physical and digital. The Bank is focused on digital empowerment through cutting-edge digital banking technologies, and pioneered FriMi, Sri Lanka’s leading digital banking experience. Nations Trust Bank PLC is an issuer and sole acquirer of American Express Cards in Sri Lanka with market leadership in the premium segments.

 



 


February 19, 2024
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9min
  • Group assets cross Rs 2 Trillion
  • Deposits cross Rs 1.5 Trillion
  • Advances of over Rs 1 Trillion
  • Provides over Rs 40 Bn for impairment
  • Rs 22.5 Bn in taxes

Hatton National Bank PLC (HNB) showcased strong and sustainable performance in 2023, in all aspects namely liquidity, asset quality, capital, efficiency and profitability amidst global and local economic uncertainties.

Commenting on the performance, Mr Nihal Jayawardene, Chairman of Hatton National Bank PLC, stated that “we commenced the year with optimism, hoping that the worst of the financial crisis was behind us. However, we remained cautious about the uncertainties that prevailed. The Board continued to maintain focus on key risk areas and the opportunities, to navigate through the uncertainty in the operating environment. This enabled us to record robust performance overall”




He added that “The Board joins me in commending the CEO/Managing Director Jonathan Alles for the leadership provided to steer ahead during the most difficult times in the history. I express my sincere gratitude to the HATNA team for their commitment and our customers who have been HNB’s strongest champions”.

The Bank’s interest income experienced a YoY growth of 37.2%, reaching Rs 284.1 Bn despite the decline in AWPLR by approx. eight percentage points during the last two quarters of the year, in line with Central Bank’s expansionary monetary policy. Although deposits rates also declined in line, the 12.2% growth in deposits and the term deposits mobilized at higher interests resulted in Interest expense increasing by 72.6% to Rs 179.8 Bn. The resultant net interest income expanded by 1.4% YoY to Rs 104.3 Bn.

The Bank’s net fee and commission income saw a YoY increase of 4.4%, rising from Rs 15.2 Bn to Rs 15.8 Bn, primarily fueled by higher volumes in credit cards, improved remittances and an increased adoption of our digital banking services. Increased SWAP volumes and the revaluation of on-balance sheet assets with the appreciation of Sri Lankan Rupee during the year as opposed to the significant depreciation experienced in the previous year, resulted in the Bank recording a net exchange loss for the period.

Having provided Rs 73 Bn on investments in foreign currency denominated government securities up to 2022, the Bank increased its impairment cover up to 52% from 35% on a prudent basis, with an additional provision of Rs 38 Bn during the year. With economic conditions improving especially during the second half, asset quality which has been under pressure indicated signs of recovery. Nevertheless, the Bank continues to maintain a prudent approach to provisioning due to the relatively high levels of uncertainty that prevails with the global and local economy, maintaining its provision cover at 57.5%. Accordingly, net stage 3 ratio improved to 3.76% from 4.90% in September 2023 and remains well above the industry level. HNB’s total operating expenses increased to Rs 35.5 Bn from Rs 30.4 Bn on inflationary pressure in the economy, resulting in a cost to income ratio of 29.9% compared to 22.0%, recorded in the previous year.

The Bank’s total effective tax rate increased to 52.5%, reflecting the full year’s impact of the increase in corporate tax rate from 24% to 30% and the introduction of the social security contribution levy of 2.5%, which took effect from October 2022.

The Bank recorded a profit after tax of Rs 20.35 Bn compared to Rs 14.0 Bn recorded in 2022 while the Group recorded a PAT of Rs 23.6 Bn compared to Rs 15.7 Bn in the previous year. The Board of Directors has proposed a final dividend of Rs 8.00 per share, which consist of a cash dividend of Rs 4.00 per share and a scrip dividend of Rs 4.00 per share, for both voting and non-voting shares.

Commenting on the performance, Jonathan Alles, Managing Director / Chief Executive Officer of HNB PLC. stated that “During these most challenging and uncertain times the Bank has focused on sustainable growth ensuring the safety of depositors, facilitating access to finance and business revival for customers, providing fair rewards and recognition for employees, and offering investors a reasonable return for the assumed risk.”

He added that “Inspiring our customers to move forward with optimism is key to growth and we set out to understand and address customer pain points. We also supported our customers through the pandemic, the financial crisis and its aftermath, keeping businesses afloat by restructuring loans, offering moratoria and even grants for micro entrepreneurs. HNB has established a robust support system for our clients, catering to their financial services requirements across their entire value chain through the Bank and other Group companies.”

“HNB has always aligned its strategy to the country’s needs and is committed to charting a course that delivers shared prosperity to Sri Lankans and supporting the Country’s transition to a low carbon economy. Areas identified for growth include tourism, exports, renewable energy, healthcare, education, information technology, local manufacture and agriculture. We are excited about inspiring farming communities to adopt green agricultural practices to strengthen the country’s food security. We also want to groom the next generation of entrepreneurs through dedicated programmes and working with educational institutions at different levels. Simultaneously we will work to attract greatly needed foreign direct investments to optimise the infrastructure in place.”

He further stated that, “growth must be resilient, built on solid foundations of disciplined financial management and sound corporate governance. It is the need of the hour at individual, entity and government levels as we stand up not just for our rights but to honour our obligations as well.”

The Bank’s asset base expanded at 14.4% YoY to Rs 1.9 Trillion as at end of December 2023. However, the Bank witnessed a contraction in gross loan book of 1.8% due to sluggish demand for credit and the cautious approach adopted during the first half with interest being relatively high. On the other hand, the total deposits of the Bank continued its growth trajectory, expanding by 12.2% YoY to Rs 1.6 Trillion.

The Bank reported strong Tier 1 and Total Capital Adequacy ratios of 13.66% and 17.13% against the minimum statutory requirements of 9.5% and 13.5% respectively, with the provision to drawdown a further 250 bps from the Capital Conservation Buffer. The Bank has continued to maintain a strong liquidity position with a Statutory Liquid Asset Ratio of 48.2% and an all currency Liquidity Coverage Ratio of 445.9%, which are both well above regulatory minimum requirements of 20% and 100% respectively.

HNB is rated A (lka) by Fitch Ratings and was awarded the esteemed title of “Sri Lanka’s Best Corporate Citizen” for 2022 by the Ceylon Chamber of Commerce. Other major accolades include being adjudged the “Best Retail Bank in Sri Lanka” for the 13th occasion by the Asian Banker, being declared the “Best SME Bank” by Asiamoney Magazine, as well as securing a Top 5 position on Business Today’s Top 40 rankings for 2023. HNB was ranked among Sri Lanka’s Top 10 Most Admired companies in 2022 by the American Institute of Certified Public Accountants and Chartered Institute of Management Accountants and the International Chamber of Commerce Sri Lanka.




February 14, 2024
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5min
  • Consolidated revenue of Rs.42.4 billion, up 9.9%
  • Healthcare revenue up 19.3% YoY to Rs.21 billion

February 13, 2024: Diversified Sri Lankan conglomerate Sunshine Holdings PLC (CSE: SUN) has recorded a consolidated revenue of Rs.42.4 billion during the first nine months of the current financial year (9MFY24). Amidst the backdrop of a moderately stable macroeconomic conditions, the Group has reported solid top-line and bottom-line growth of 10% and 44% YoY with Profit after tax (PAT) increased to Rs.5.5 billion as a result of business growth and lower finance costs during the period.

The Group’s Healthcare sector emerged as the largest contributor to Sunshine’s top-line, accounting for 50% of total revenue, with Consumer at 35%, and Agribusiness 15% of the total revenue.




Commenting on the performance, Sunshine Holdings Chairman Amal Cabraal said, “Sunshine Group remains steadfast with all key sectors delivering strong results. Our committed team’s resilience and executional prowess coupled with sound fiscal management, have effectively navigated the short-term stresses amidst the nation’s gradual recovery from the economic crisis. While the stringent policy measures aligned with the IMF program bring challenges, Sunshine Group remains confident in staying on course, continually enhancing its value proposition for all stakeholders and contributing positively to Sri Lanka’s economic revival.”

Healthcare

During the period in review, Group’s Healthcare sector posted revenue of Rs. 21 billion, a significant increase of 19.3% YoY backed by the increased top-line of all business units under the sector. Pharma segment revenue grew by 4.4% YoY and the Medical Devices segment grew by 40.8% YoY driven by both price and volume increase. Revenue of the Retail segment saw a 20.2% YoY increase, fueled by an improved footfall of 19% compared to the previous year.

Lina Manufacturing, the Pharma manufacturing business of the Group, recorded an impressive revenue growth of 193.6% YoY, mainly driven by higher volumes in the Metered Dose Inhaler (MDI) plant. Group’s Healthcare sector EBIT was Rs. 3.4 billion.

Consumer

The Consumer sector, which includes both brands and export businesses, reported a 14.8% YoY increase in revenue to close at Rs. 9.7 billion in 9MFY24. Consumer Brands business showcased impressive performance in 9MFY24 with Group’s brands continued to grow market shares. Combined Tea category experienced a volume growth of 10.1% YoY and a value growth of 58.8% YoY. The confectionery segment revenue declined by 20.9% YoY, despite an increase in price, due to a volume contraction of 27.4% YoY. PAT from the Consumer segment significantly increased by 111.6% YoY due to the growth in brand’s business. The export segment revenue declined by 28% YoY, due to the declining volumes and adverse macro-economic conditions.

Agribusiness

The Agribusiness sector of the Group, represented by Watawala Plantations PLC (CSE: WATA), reported a revenue of Rs. 6.5 billion, down by 2.5% YoY. This was due to the decline in palm oil prices due to significant drop in demand. However, palm oil production increased by 16.7% YoY to 12.2 million Kgs in the current period compared to 10.5 million Kgs in the same period last year. Dairy business revenue grew by 30.2% YoY due to increases in both sales volume and milk price. The PAT of the Agri sector closed at Rs. 2.2 billion for 9MFY24, down by 15.1% YoY.




February 8, 2024
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20min

Financial Year 2023/24 – First Nine Months Performance

Chief Executive Officer’s Review

LKR Mn                                   Quarterly Financial Snapshot
FY24 Q3 Vs FY23 Q3 Vs FY24 Q2
Consumer Brands 15,433.1 13.2% 34.0%
Healthcare 15,326.0 -2.7% -14.4%
Mobility 460.4 19.8% 22.4%
Other 3.2 462.1% -83.9%
Revenue 31,222.7 4.9% 4.7%
     
Gross Profit 9,851.3 23.5% 13.8%
Gross Profit Margin 31.6% 4.8pt 2.5pt
     
EBITDA 4,288.6 19.1% 35.2%
EBITDA Margin 13.74% 1.6pt 3.1pt
       
Operating Profit 3,868.5 19.6% 39.8%
Operating Profit Margin 12.4% 1.5pt 3.1pt
     
Net Interest Cost (515.6) -57.1% -32.4%
Income Tax Expenses (1,055.5) 23.6% 45.3%
       
Earnings 2,220.1 126.6% 82.0%

Amidst the backdrop of relatively stable operating conditions in the domestic economy, Hemas Holdings PLC (HHL) demonstrated a steady performance in the first nine months of the financial year 2023/24, achieving a cumulative revenue growth of 10.3 percent amounting to Rs. 90.2 billion. Operating profits for the period mirrored the revenue growth, reaching Rs. 8.8 billion, while earnings experienced a 41.2 percent increase, posting a total of Rs. 4.5 billion.

 



 

During the quarter, Group revenue witnessed a marginal increase of 4.9 percent standing at Rs. 31.2 billion. However, strong contribution from the Learning Segment due to seasonality effect  and the positive impact of efficiency improvement initiatives resulted in operating profit and earnings registering growth of 19.6 percent and 126.6 percent, reaching Rs. 3.9 billion and Rs. 2.2 billion, respectively.

Operating Environment

Sri Lanka witnessed a gradual economic turnaround, marked by favourable shifts in key indicators. The Gross Domestic Product (GDP) for the third quarter achieved positive growth at 1.6 percent, ending a streak of consecutive negative quarters since the onset of 2022. Throughout the period, the exchange rate remained relatively stable, and the Average Weighted Prime Lending Rate (AWPLR), which was over 28 percent last year, has now reduced to below 12 percent. Furthermore, the external sector of the economy demonstrated optimistic developments, including a rise in tourist arrivals and an improved balance in the Current Account.

Despite the positive developments in the operating environment, consumer spending remained low due to substantial inflationary pressure. Although September 2023 marked a historic low in inflation growth, it is crucial to note that while this percentage denotes the lowest growth in recent history, the calculation is grounded on an already elevated base.

Consumer Brands

During the third quarter, there was a surge in demand across the industry attributable to the festive season; however, it did not reach the anticipated levels due to increased pressure on purchasing power of the consumers. Despite these challenges, modern trade channels exhibited a higher offtake compared to general trade channels with improved footfall to supermarkets during the period. Prices exhibited a gradual stabilisation characterised by comparatively minimal fluctuations in comparison to the preceding quarters.

With the commencement of the pre-school season in January 2024 and the imminent commencement of the back-to-school season in February 2024, the stationery industry performance remained significantly influenced by seasonal stocking across both essential and non-essential categories. Under relatively lower prices, intense competition unfolded across all three segments: mass, value-for-money and premium. Consumers, amidst inflationary pressure remained price sensitive, resulting in a tendency to strategically phase out their purchases.

The challenges in the economic landscape of Bangladesh were worsened by the prolonged inflationary pressure driven by soaring food inflation, concurrent political turmoil, timed with the parliamentary election held in January 2024.

The Consumer Brands Sector posted a cumulative revenue growth of 17.1 percent to reach Rs. 38.0 billion driven by the increased performance of the businesses amidst relatively stable operating conditions. Further to the revenue growth, improved product mix, cost-saving initiatives and lower finance costs resulted in the operating profit and earnings growing by 54.8 percent and 117.2 percent, reaching Rs. 5.7 billion and Rs. 4.1 billion, respectively.

The revenue for the quarter witnessed a growth of 13.2 percent to reach Rs. 15.4 billion while the operating profits reported a growth of 73.8 percent due to improved performance of the Home and Personal Care Business and the seasonality impact of the Learning Segment. Amidst the increase in operating profits, lower finance costs and the impact of reduced NCI, earnings for the period reached Rs. 2.1 billion posting a growth of 179.2 percent for the quarter.

Home and Personal Care

During the quarter, the Home and Personal Care business strategically intensified its emphasis on the personal care segment, yielding a notable surge in market share and enhanced performance within the category. The heightened focus on target market segments coupled with increased concentration on value propositions, empowered Hemas to outperform the market resulting in volume-led growth for key categories, including baby soap, oral care, and shampoo. While both the general and modern trade channels experienced volume growth, the modern trade channel exhibited a superior growth trajectory during the quarter. Sustaining ongoing investments in the beauty space, ‘Prasara’ continued to witness significant traction in the market.

 Learning Segment

 Leveraging seasonal offtake, ‘Atlas’ sustained its market-leading position in the mass market while simultaneously expanding market share in the newly entered premium and value-for-money segments. In line with the brand’s purpose of ‘making learning fun’, multiple digital efforts were undertaken to create a unique and novel Point-of-Difference (POD) in a highly commoditised mass segment, positively contributing to the brand value and the overall performance.

Consumer Brands International

Despite persistent inflation and the contraction in the value-added hair oil (VAHO) market, ‘Kumarika’ increased its market share marginally in the VAHO segment. Recent launches in the value-for-money verticals and the pure coconut oil market gained significant traction during the quarter, contributing over 10 percent to the overall revenue of the Bangladesh Business. The introduction of the personal care brand  ‘Actisef’ a few years ago, as an initiative to mitigate single-brand concentration, has proven to be a substantial contributor to the topline.

During the quarter, ‘Atlas’ continued to focus on the East African market while  increased focus in the Middle Eastern region resulted in repeat orders for ‘Kumarika,’ leading to a notable revenue contribution from the export segment.

Healthcare

Sri Lanka continued to face a web of interconnected health challenges, ranging from unresolved and persistent drug shortages, substandard medicines, unregulated importation, to the migration of healthcare workers. Amid reduced purchasing power, the pharmaceutical industry continued to witness a market shift towards low-quality, low-price variants, exerting pressure on volumes. Instability within the National Medicines Regulatory Authority (NMRA) resulted in delays in new product registrations and the acceptance of buyback orders by the The Medical Supplies Division (MSD), amplifying challenges for the pharmaceutical industry at large.

The Healthcare Sector posted a cumulative revenue of Rs. 50.9 billion, a growth of 6.1 percent while the operating profit for the period stood at Rs. 3.7 billion with a degrowth of 4.2 percent. Despite the increase in revenue, the decline in operating profit is due to the one-off adverse impact from NMRA price reduction on distributor inventory and  inflationary pressure on overheads. Consequently, earnings decreased by 6.8 percent, reaching Rs. 1.7 billion, despite the increase in revenue and lower net finance costs.

During the quarter, the Sector revenue declined by 2.7 percent, reaching Rs. 15.3 billion, while the operating profit contracted by 25.1 percent, amidst increased overheads to reach Rs 1.0 billion. Attributed to lower finance costs resulting from working capital management initiatives and reduced interest rates, the earnings of Rs. 482.0 million posted a growth of 16.9 percent.

Pharmaceuticals

 During the quarter, the Pharmaceutical Distribution Business witnessed volume-led growth outperforming the market in many key therapeutic segments. Multiple working capital initiatives resulted in approximate 50 percent reduction in finance cost for the Business arising from the combined effect of working capital base reduction and interest rate reduction. Over 20 new products were introduced to the market during the quarter in critical spaces including oncology, gastroenterology and cardiology.

The Pharmaceutical Manufacturing Business faced challenges with delayed registration of new products at NMRA for its primary focus area; Morison Branded Generics. Despite the slowdown in new registrations, branded portfolio continued to deliver robust performance, with ‘Empamor’ reclaiming its market-leading position in volume terms. Capacity utilisation levels at the  ‘Homagama’ factory were maintained at over 50 percent with improved operational efficiencies.

Hospitals

Hospitals Business delivered strong performance for the period with double-digit growth in surgical revenue and in-patient revenue under elevated occupancy levels at both the hospitals. Increased focus on anchor specialties including nephrology, cardiology gastroenterology and orthopaedic segments yielded significant revenue growth in these areas.

Hemas Ambulatory Surgical Care was introduced during the quarter, a pioneering service designed to transform the way Sri Lankans experience surgical procedures. It adopts a unique patient-centric approach to improve convenience and cost-effectiveness, enabling patients to return home on the same day of the surgery and recover faster, better, and more comfortably.

Mobility

Despite the marginal recovery observed in merchandise exports towards the latter months of the quarter and the 6.3 percent growth in total throughput witnessed during the nine month period at the Port of Colombo, the Maritime Sector continued to witness challenges in both domestic and international spaces.The increased tensions in the Suez Canal have compelled vessels to redirect their routes around the southern tip of Africa, resulting in an extended journey duration of 10-14 days with many being rerouted via the Port of Colombo. Aviation space continued to witness challenges during the period in both passenger and Cargo verticals. However, both segments witnessed improved volume recovery during the quarter, with increased tonnage uplift for cargo, while the passenger vertical gained traction due to heightened student and labour traffic to Europe and the Middle East, respectively

The Mobility Sector witnessed a marginal decline in cumulative revenue to reach Rs. 1.3 billion, while the cumulative operating profit and earnings stood at Rs. 751.2 million and Rs. 402.6 million respectively, posting a decline of over 35 percent due to the adverse impact of lower freight rates and the appreciation of the domestic currency.

During the quarter, the Sector posted a revenue of Rs. 460.4 million, a growth of 19.8 percent mainly due to increased volume from seasonal cargo. The revenue growth was fully translated to operating profits, recording a growth rate of 20.2 percent at Rs. 279.6 million, while earnings for the period reached Rs. 144.2 million at a growth rate of 53.4 percent with lower tax expenses.

Leading with ESG

Hemas marked 75 years of enriching Sri Lankan families’ lives by investing in the country’s future. The Hemas x Hatch Slingshot, a three year corporate innovation programme supporting 75 startups, is a testament to the Group’s commitment to fostering a new ecosystem in Sri Lanka, with businesses contributing to essential infrastructure, knowledge, and capital. By supporting startups, the Group plays a crucial role in shaping an innovative and thriving future for Sri Lanka while delivering solutions that empower families.

The collaboration with Lanka Sathosa for the introduction of an eco-bag initiative is a part of the Group’s commitment to address plastic pollution in Sri Lanka. By encouraging and incentivising consumers to adopt eco-friendly practices, the Group aims to reshape consumption habits and foster a healthier environment.

The Hemas Consumer power brand Baby Cheramy joined forces with Sri Lanka College of Paediatricians to address the pressing issue of child injuries and launched a guide booklet focused on educating parents on prevention of home accidents. In response to the escalating violence against children in recent years, Hemas Outreach Foundation partnered with Sri Lanka College of Paediatricians and the National Secretariat for Early Childhood Development to launch the first-ever nationwide campaign aimed at empowering and educating preschool children to safeguard themselves against abuse.

In addition, the Group continued to address the needs of the communities through its social initiatives, focusing on empowering families and promoting inclusivity, equality, and diversity. The Group  initiatives impacted over 62,000 families across the island, reinforcing the Group’s commitment to being a catalyst for positive change in the communities it serves.

Outlook

While the broader macro economy has shown a turnaround, the consumer disposable income continues to be hampered amid multiple adjustments to direct and indirectly taxes and inflationary pressure. Revisions to the prices of basic utilities such as electricity tariffs, coupled with recent changes to VAT laws, have exacerbated the situation for the general population. While these modifications have played a key role in the efforts of economic revival, they have simultaneously posed difficulties for the average citizen, creating a complex economic landscape with both promising and challenging aspects. Hemas cognisant of these challenges persisting in the upcoming quarters, remains confident in its capability to navigate the headwinds and sustain resilience.

In line with its purpose, the Group and its subsidiaries will continue to adapt a consumer centric approach in which meeting the ever evolving needs to the consumers would be an integral part. High emphasis will be made on both organic and inorganic growth within our core focus areas to exploit opportunities in Consumer Brands and Healthcare spaces. The Consumer Businesses will focus on championing local ingredients, cultivating purpose-driven brands and expanding in to international spaces. Simultaneously, the Healthcare Sector will prioritise ensuring availability, developing a Sri Lankan pharmaceutical brand and facilitating access to quality healthcare. Fostering a culture that empowers employees, Hemas will persist in nurturing talent across the Group while collaborating with our business partners to create long term value.

As my tenure as the Group Chief Executive Officer concludes on March 31, 2024, I want to express my heartfelt gratitude to the Hemas team for their focused efforts in navigating the pandemic and for standing with me during one of the toughest operating landscapes Sri Lanka has ever witnessed. Furthermore, I extend my deep appreciation to the Board for their unwavering belief in me and for providing continuous support and guidance. I have full confidence in the team’s ability to drive the company to greater heights and extend my best wishes for the Group’s continued success in the years to come.


January 26, 2024
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5min

Expolanka Holdings PLC announced its financial results for the third quarter ending 31 December 2023, delivering a resilient performance, and leveraging its strengths despite global economic headwinds and uncertainty.

 



 

The Group reported a Revenue of Rs. 66.8 billion for the quarter and Rs. 183.9 billion for the nine months ending 31 December 2023. Gross Profit stood at Rs. 10.9 billion for the quarter, summing up to Rs. 34.2 billion for the nine-month period. A Net Loss of Rs. 5.1 billion was recorded for the quarter, contributing to a nine-month Net Loss of Rs. 12.3 billion.

Global trade faced challenges due to tightening monetary policies, high inflation, geopolitical tensions, trade protectionism, and elevated energy prices. These factors contributed to uncertainty, reduced consumer spending, and lower demand conditions.

Despite subdued global trade and fluctuating freight rates, Expolanka’s Logistics sector sustained its customer base and welcomed new clients, ending the quarter with Rs. 64.4 billion in Revenue and a Gross Profit of Rs. 10.2 billion. The sector experienced a Net Loss of Rs. 5.2 billion for the quarter. The sector also reported a revenue of Rs. 177 billion, a Gross Profit of Rs 32.1 billion and a Net Loss of Rs. 12.7 billion for the nine months of the financial year.

A drop in volumes and a steep decline in freight rates have impacted Revenue and Gross Profit, resulting in Operating Losses. Margins faced pressure due to declining freight rates and volumes. Profitability decline was visible across both Air and Ocean Freight and was more pronounced in the latter due to experiencing visible freight rate corrections during the year.

The Group reported that strategic investments to enhance domestic capabilities and recent international acquisitions namely, Trans American Global and the LEI Group, have performed to satisfaction whilst integration efforts have moved forward gradually.

With the company’s primary focus on strengthening customer relationships, EFL was able to retain all its core customers whilst witnessing growth in new customers. The strategy of enhancing service offerings and domestic logistics capabilities have had a positive impact both commercially and financially, establishing the group’s long-term vision as a global logistics company.

Additionally, EFL was able to leverage its strong network presence, market know-how, infrastructure capabilities and its experienced leadership team to bring to bear the exceptional value-added service offering to its customers. However, cost control initiatives are underway to improve profitability going forward while the recent acquisitions position the company well for long term growth.

The Leisure sector delivered strong results with Rs. 1 billion Revenue, a Gross Profit of Rs. 655 million and a Profit-After-Tax of Rs. 200.4 million. Robust corporate travel sales and recovering inbound and leisure travel segments boosted performance. Efficient operations and service excellence remain key success factors for the organization.

The Investment sector reported a steady quarter with Rs. 1.3 billion in Revenue and a Gross Profit of Rs. 33.8 million, reflecting stabilization in export operations and gradual progress in the IT business.

Prudent cash flow management and a low geared capital structure provided Expolanka the stability and flexibility to ride out external shocks, service debt and fund future expansion plans. Reinforced efficient working capital management has enabled the settlement of Rs. 10.02 billion in debt over the nine-month period. Working capital efficiencies also helped drive down finance costs and channel funds into growing operations. The focus on minimising finance costs has allowed for reinvestment into operations, maintaining a low-geared capital structure.

The company remains committed to long term investments across infrastructure, systems, and capabilities to actively strengthen its competitive positioning while driving improvements in operational and financial performance.

Committed to sustainability, the organization continues to prioritize Environmental, Social, and Governance (ESG) initiatives. Under its Global Goodness campaign, the Group has actively driven forward programs related to UN sustainability goals, green logistics, and support for women’s empowerment.

Despite the challenging macroeconomic environment, Expolanka Holdings remains agile to reducing challenges. The company is committed to its focus on business growth, efficiency improvement, and liquidity enhancement. Long-term strategies include continued investments in capabilities, infrastructure, and systems to navigate the evolving global business environment.


November 27, 2023
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5min

 



 

 

  • Revenue up by 11%
  • Gross profit increases by 2%
  • Joint ventures in Kingdom of Saudi Arabia, Africa, and Australia
  • Pintharoo Shilpee Abhiman programme to develop the livelihood of painters

Sri Lanka’s market leader in wood coatings and emerging regional conglomerate, JAT Holdings PLC, reported robust financial performance for Q2 of FY 2023/24, recently. Most notably, the Group recorded its highest-ever Export Turnover at Rs. 1,827 million, against Rs. 795 million in the corresponding period in the year prior, a growth of 130%, driven in part by market expansion. Alongside this, the Group also recorded a healthy 11% growth in Revenue to Rs. 4,878 million, up from Rs. 4,392 million in the in the first six months of FY 2023/24, compared to the same period in the year prior. Gross Profits too rose marginally by 2% during the same period to Rs. 1,417 million, from Rs. 1,383 million in the previous year.

Meanwhile, the Group has achieved significant growth through its manufacturing operations in Bangladesh, led by its new plant, which has been supported by value engineering driven by JAT Holdings’ cutting-edge R&D Facility in Sri Lanka. These developments, along with other contributors to business expansion, including exports, have helped to drive significant topline growth for the Group.

JAT Holdings PLC’s Profit Before Tax for the quarter under review, however, while healthy, recorded a decline, though this has been driven by conscious strategic decisions taken to strengthen the Group’s brand portfolio and its long-term market share. Amongst these decisions have been diversification into the Group’s joint venture in the Kingdom of Saudi Arabia to further the development of its network of EV chargers. The Group has also invested heavily into the incorporation of JAT Paints Africa Ltd, its Pintharoo Shilpee Abhiman program in partnership with NAITA and Sirasa to build equity around painters and wood craftsmen, forward vertical integration through JAT Showrooms in the Maldives, Bangladesh and Australia, and backward vertical integration through its new binder plant in Sri Lanka and its alkyd plant in Bangladesh, along with important investments into digitalization and the Group’s technology infrastructure.

Commenting on the Group’s strategic initiatives, particularly in response to the crises that have emerged in the recent past, Nishal Ferdinando – CEO at JAT Holdings PLC said, “While the Group’s financial position remains robust, and our performance has been satisfactory, we have consciously decided to invest heavily in our brand portfolio and infrastructure in order to continue to deliver exceptional value to our stakeholders over the medium- and long-term. Accordingly, we have shifted our focus to export expansion and maximizing operating efficiencies through automation and effective cost management, which are helping to further consolidate and strengthen our balance sheet, whilst maintaining a positive cash flow and adequate liquidity to meet our objectives.”

Founder and Managing Director of JAT Holdings PLC, Aelian Gunawardene further added, ‘’In our quest to deliver maximum value to our stakeholders, we continue to focus on our strengths and address any weaknesses that may emerge, whilst taking a long-term approach to secure our brand equity, supply chains and our communities. Particularly in terms of our communities, we are continuing to extend relief schemes to cushion our people from the economic challenges, whilst doubling down on efforts such as Pintharoo Shilpee Abhiman, which are helping vulnerable communities at the grassroots level.”

Accordingly, amidst a challenging economic landscape, JAT Holdings PLC has recorded robust financial performance driven by significant growth in the export sector, following strategic investments made to build brand equity and strengthen backward vertical integration, which the Group believes will support its long-term growth and competitiveness, as it allows the company to have more control over its supply chain and reduce dependency on external suppliers.

 



 

 


November 17, 2023
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6min

 



 

 

People’s Leasing & Finance PLC (PLC) reported strong financial performance for the second quarter of the financial year 2023/24, recently, demonstrating unwavering resilience and a commitment to excellence, achieving significant year-on-year increases in Profit After Tax (PAT) for both the company and the Group.

For the first six months of FY 2023/24, PLC recorded a robust Profit After Tax (PAT) of Rs. 1,100 million, marking an impressive 62.0% increase compared to the corresponding period in the previous financial year. The second quarter was particularly outstanding, with a 54.6% increase in PAT, reaching Rs. 767 million, contributing significantly to profitability for the period ending 30th September 2023. Meanwhile, the PLC Group also achieved a Profit After Tax of Rs. 1,678 million during the first six months of FY 2023/24, reflecting a substantial year-on-year increase of 35.8%. Net Interest Income for the Group for the period ending 30th September 2023 reached Rs. 6,495 million.

Interest Income for the half-year ending 30th September 2023, witnessed a year-on-year increase of 3.7%, reaching Rs. 14,714 million. This increase can be attributed to a substantial rise in investments, driven by escalated interest rates in the country. The Company achieved significant year-on-year profit growth through improved collections and  intensified credit quality which led to 91.3% reduction in impairment charges and other losses on loans and receivables, recorded at just Rs. 162 million, as at 30th September 2023.

An 8.2% decrease in Interest Expense during the quarter compared to the corresponding quarter of the previous financial year is indicative of PLC’s ability to capitalize on the recent policy rate drop through prudent management of funding lines. This enabled PLC to record Rs. 2,854 million Net Interest Income during the second quarter up by 8.6% compared to the second quarter of Financial Year 2022/23.

In spite of the inflationary environment in which it operates,  PLC successfully curtailed the growth in operating expenses to 3.8% compared to the same period in FY 2022/23 owing to the improved efforts to increase efficiency through digital initiatives, right-sizing of branches, and improvements in internal processes, . Additionally, operating expenses of the Group experienced a modest increase of 2.4% compared to the same period in the previous financial year.

PLC’s Total Asset Base as at 30th September 2023 was Rs. 153,817 million, while Total Loans and Receivables  amounted to Rs. 100,833 million, consolidating its position as one of the largest loans and receivables portfolios in the industry, despite limited business expansion on account of the challenging economic environment. The Total Asset Base of the Group as at 30th September 2023 was Rs. 179,758 million, while the Group’s Total Loans and Receivables portfolio amounted to Rs. 113,512 million.

PLC’s concerted efforts with regard to collections enabled it to manage a majority of funding requirements via collections, and thus remain vigilant in growing the Deposit Base amidst a high interest environment. Nevertheless, deposit base remained robust at Rs. 93,197 million as of 30 September 2023. The Group’s Deposit Base also stood at Rs. 101,101 million as of 30th September 2023. Furthermore, PLC implemented a highly disciplined strategy to liquidity management in the middle of a highly volatile and complex business endeavor and maintained capital adequacy ratios well ahead of the regulatory minimums at the end of Q2 to guarantee financial stability..

Commenting on the financial performance, CEO/General Manager at PLC, Shamindra Marcelline said, “Our exceptional Q2 performance underscores our ability to navigate a complex, dynamic, and challenging business landscape. It also demonstrates our unwavering commitment to our valued customers and the strength of our operational fundamentals. Even in the face of adversity, we remain steadfast in delivering financial solutions that empower individuals and businesses, contributing to the economic prosperity of all Sri Lankans.” These remarkable financial results highlight PLC’s unwavering commitment to delivering financial solutions, fostering growth, and contributing to the economic prosperity of all Sri Lankans. The company’s resilience, strategic adaptability, and dedication to excellence continue to be the driving forces behind its success. Accordingly, PLC remains a leader in the non-banking financial services sector, embodying innovation and trust, and enriching lives.

 



 

 



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