Pharma and consumer biz back Hemas1Q performance

• Group revenue down 2% to Rs.2.9bn
• Contains costs, cuts debt to soften pandemic effects
• Says issues with int’l consumer biz now being addressed 

Gradual recovery in healthcare and domestic consumer segments of Hemas group helped to soften the impact stemming from the pandemic as its logistics and marine sector suffered a big volume slump while the pandemic nearly decimated its leisure sector, although the latter’s impact on the group is less. 

While the group’s pharmaceutical distribution business operated at its peak capacity during the pandemic despite certain logistical challenges, the group’s personal care segment under its broader consumer business grew as people became more health and hygiene conscious creating more demand for certain products in this category. “During the quarter, we have seen significant performance variance across categories, with personal wash, home care and oral care all performing strongly. HPC domestic (segment) has increased production and sales during the quarter and we are now at near-normal levels”, Hemas Group CEO Steven Enderby said. 

The group reported revenues of Rs.12.9 billion for the three months to June 2020 (1Q21), a 1.6 percent decline from a year earlier period.

Consumer and healthcare sectors, which account for more than 90 percent of the group revenue, provided the group with defensive cash flows during the pandemic and its aftermath, and the group expects to capitalise on them depending on how the pandemic could play out. 

“We are adopting a dual strategy recognising that increased consumer consciousness towards health and hygiene is an opportunity for Hemas and also aggressively focusing on cost management and cash conservation in order to navigate through these unpredictable times,” Enderby said. 

Meanwhile, Hemas reported earnings of 45 cents a share or Rs.269.4 million for the quarter under review compared to a loss of Rs.425.9 million in the comparable period last year, which resulted from loss of business in the aftermath of the Easter Sunday attacks.

The group showed discipline in containing costs with reduction in discretionary expenditure, salaries at senior levels and in businesses with very 
low revenues. 

In managing working capital, the group reduced its debtor levels at both its pharmaceutical distribution and Morisons, the group’s pharmaceutical manufacturing arm. 

The group’s healthcare business, which comprised of pharmaceutical distribution, manufacturing and two hospitals in Thalawathugoda and Wattala, posted revenues of Rs.8.6 billion for three months under review compared to Rs.6.9 billion in the comparable period last year. 

The segment reported an operating profit of Rs.647.2 million compared to Rs.379.8 million a year ago. 

The consumer business revenues fell to Rs.3.8 billion from Rs.4.6 billion a year ago resulting in an operating loss of Rs.47.7 million compared to a profit of Rs.16 million last year.

The sector was mostly impacted by the weak international HPC business, which the company is now addressing. Meanwhile Atlas, its school stationary business, lost sales during the April season due to prolonged closure of schools. 

The group’s leisure business reported revenues of Rs.42.3 million for the quarter, down from Rs.605.9 million a year ago. 

Hotels belonging to Hemas opened for domestic travellers from June while two of its properties had been offered for paid quarantine centres. 

The leisure sector’s contribution to the group revenue is only 3 percent after Hemas divested its travel and aviation segments. This sector now comprised of Serendib Hotels and Anantara Peace Haven Tangalle.

The logistics and marine sector of the group reported revenues of Rs.455.8 million compared to Rs.694.8 million a year ago while its operating profits fell to Rs.33.9 million from Rs.123.6 million a year ago due to lower trade and transshipment volumes.