Healthcare, agri and consumer businesses power Sunshine September performance

Sunshine Holdings PLC reported robust revenues and profits for the three months to September, as the conditions favoured its healthcare cluster while the agri-business benefitted from higher palm oil net sales average. 
The consumer business received a tailwind from its well-known brands and the confectionary business, which was added about a year ago. 

The group’s interest into energy however trimmed down after the company took a strategic decision to exit from the renewable energy business, as it started hiving off its hydro and solar power businesses since April this year, to refocus on its core sectors.  The company reported revenues of Rs.8.46 billion in its fiscal second quarter ended in September, logging a 37 percent increase from the same period last year. The company reported earnings of Rs.1.44 a share or Rs.383.3 million for the period, up 68 percent from the same period last year. 

In the six months to September, the company reported earnings of Rs.2.69 a share or Rs.1.21 billion, up 72 percent, from revenues of Rs.15.8 billion, a 44 percent increase from the corresponding period 
last year. 

The healthcare sector, which accounts for about 54 percent of total revenues, generated revenues of Rs.8.55 billion in the six months to September, recording an increase of 47.7 percent over the same period last year. 
Sunshine’s healthcare business is comprised of pharmaceutical distribution, manufacturing and medical devices. It also operates a network of health and wellness-related retail stores under ‘Healthguard Pharmacy’. 

Drug makers and distributors became early beneficiaries of the increased health awareness caused by the pandemic last year and the subsequent inward shift to encourage local manufacturing of medicinal drugs to reduce excessive reliance on other nations. 

Big pharmaceutical companies around the world are splitting their drug manufacturing businesses from the rest, as they grew into outsize levels over the years. Johnson & Johnson, the world’s largest health products company, last week announced it would split its US $ 15 billion pharmaceutical and medical device business from its consumer business.

This was after Pfizer and Merck announced they would cleave off their consumer businesses to double down on their fast-growing pharmaceutical businesses. 

Sunshine in January acquired Akbar Pharmaceuticals to add more heft into its medicinal drugs business, which also contributed to the stronger performance of the healthcare business. 

This segment generated an after tax profit of Rs.507.4 million in the six months, compared to Rs.423.4 million in the year earlier period, an increase of little under 20 percent. 

Meanwhile, the group’s agriculture business, comprising mainly of its palm oil plantations and a dairy segment, generated six months sales of Rs.3.41 billion and earnings of Rs.1.89 billion, up 60 percent and 106 percent, respectively.

The company said the improved performance in the palm oil segment, supported by the growth in palm net sale average, drove the revenues. Meanwhile, the dairy business added Rs.32 million into profits, marginally increasing from last year.    

The consumer business, which houses well-known brands such as the Watawala and Zesta tea, generated revenues of Rs.3.75 billion, up 35.4 percent but the profits slipped to Rs.109.5 million, from Rs.128.2 million in the year earlier period. 

“The revenue increase is mainly driven by the addition of the confectionary business segment via the acquisition of Daintee Ltd,” the company said in a statement.

The group’s energy business made revenues of only Rs.20.89 million, compared to Rs.208.75 million a year ago, as the company in April divested its mini hydropower business and solar power business in September for Rs.265 million, to refocus on its core sectors. 

Lamurep Investments Limited has a 59.48 percent stake in Sunshine Holdings.