Softlogic 1Q goes deep into red as virus bites

Softlogic Holdings PLC (SHL) suffered revenue and profit losses during the April-June quarter (1Q21) as coronavirus related lockdowns forced people to remain inside for nearly half of the period while doors for tourism business remained closed.

The group reported revenues of Rs.14.2 billion for the three months ended in June compared to Rs.17.1 billion in the same period last year, a decline of 17 percent.  However, revenue barring the insurance contracts and interest income  was Rs.11.1 billion compared to Rs.13.4 billion a year ago. Out of that, Rs.7.7 billion was from retail and telecommunication business of the group, compared to Rs.8.9 billion in the same period last year, reflecting the sector’s significant role in bringing the most cash flow to the group. 

The group’s key upmarket retail business led by Odel PLC suffered the most during the quarter under review, largely due to the fall in tourism trade.

Odel PLC lost a billion rupees in sales during the quarter as it recorded sales of Rs.613.2 million in that period compared to Rs.1.6 billion in the comparable period in 2019. 

Further, the revenue from the group’s resorts and city hotel segment plunged to just Rs.18 million from Rs.463 million in the year earlier period with the sector recording an operating loss of Rs.329.9 million compared to Rs.206.9 million in the year earlier period.  The group’s retail and telecommunication segment plunged to an operating loss of Rs.36.6 million compared to a profit of Rs.640.9 million
a year ago. 

As result, SHL, which also has interests in healthcare, insurance and financial services sectors, reported negative earnings of Rs.2.48 billion for the quarter under review compared to a net loss of Rs.752.6 million in the comparable period of last year.  

The group incurred Rs.2.43 billion in finance cost for the period, up from Rs.2.0 billion a year earlier, but the net finance cost was only Rs.1.57 billion, slightly up from Rs.1.46 billion a year ago. 

The group’s healthcare segment comprised of Asiri Hospital chain reported revenues of Rs.2.66 billion for the three months, down from Rs.3.41 billion in the year earlier period. The operating profits plunged to Rs.37.4 million from Rs.619.9 million in the year earlier period. 

Meanwhile, the group’s financial services segment, which comprises of insurance, finance and stockbroking operations, reported revenues of Rs.3.11 billion compared to Rs.3.70 billion a year ago. The segment plunged to an operating loss of Rs.375 million from a profit of Rs.562.6 million a year ago. 

Softlogic is currently engaged in an exercise to restructure its financial services cluster with fresh funding through a rights issue and the acquisition of Abans Finance PLC.