Softlogic returns to black in September on strong revenues across key businesses

• Group’s robust retail business highlights strong consumer demand until lockdowns 
• E-commerce gaining traction as online sales continue unabated despite rising store footfall 
• Consumer electronics witnessed panic buying on expectations of prolonged import restrictions 
• Mulls consumer electronics plant to serve both local and international markets

Softlogic Holdings PLC reported strong top line in the three months to September supported by its multiple business lines, helping the company return to a net profit as the group’s retail, telecommunication, healthcare, information technology and financial services cluster delivered robust performance. 

The consumer retail behemoth with expansive portfolio reported revenues of Rs.28.1 billion in revenues for the July - September quarter, up 29 percent in the same period 
last year. 

The company reported earnings of 14 cents a share or Rs.163.1 million for the quarter compared to a loss per share of 92 cents or Rs.1.1 billion in the comparable 
period a year ago. 

 The group’s retail and telecommunication portfolio which includes the upmarket retailer Odel PLC and other luxury brands, consumer electronics division, smartphones and computers, Glomark supermarket chain and the franchise restaurants generated revenues of Rs. 14.9 billion in the three months, up by robust 33 percent from a year ago. 
The operating profits jumped 65.1 percent to Rs.925.2 million.  “Group witnessed improved levels of optimism and consumer spending during the quarter although the Delta-variant mutated unrelentingly to force a nationwide lockdown for the third time,” the company said in an earnings release. 

“This further compounded the country’s economic woes with the resultant re-imposition of import restrictions making the operating climate more difficult”, the statement added.  

E-commerce party helped sales during lockdowns and continued to grow even as customer footfall increased after the ending of lockdowns as seen from the repeat orders and new customer online registrations. 

“Omnichannel shopping is predominant, and therefore decisive actions were made to focus on digital acceleration by moving available inventory to e-commerce, investing in a powerful digital content studio while increasing focus on social media marketing,” the company said.

Odel which saw strong pent up demand during the first half of the quarter lost momentum in the second half due to the reimposition of lockdowns, but online sales helped to partly offset the full impact.  Meanwhile, one-off panic buying triggered by the potential prolonged import restrictions helped revenue growth in the consumer electronics business.

The Central Bank in early September imposed 100 percent cash margin requirement when opening letters of credit to import  some 600 plus products which are of non-essential and non-urgent in nature after witnessing front loading of imports. But, the restrictions were removed a month later. 

The group is considering to set up a consumer electronics manufacturing plant to serve both the domestic and international markets, the statement added sans additional details.  Meanwhile, the group’s healthcare cluster comprising of Asiri group of hospitals, the second largest segment by revenues, generated revenues of Rs.5.9 billion in the quarter, up 30.6 percent. The operating profits were Rs.1.52 billion, up from Rs.1.02 billion. 

 Meanwhile the group’s financial services cluster comprising of life insurance, finance, asset management, stockbroking and research generated revenues of Rs.5.5 billion, up 17.4 percent from a year ago led by the life insurance business of the group which saw strong uptake in life policies and health plans. 

The broader financial services segment generated operating profit of Rs. 1.13 billion, up slightly from Rs.1.12 billion in the year earlier period.  Meanwhile, the group’s information technology segment generated revenues of Rs.1.54 billion in the three months, up 44 percent from a year ago due to digital pivot of things accelerated by the pandemic. The operating profits were Rs.207.5 million, up from Rs.108.1 million. 

The group’s automobile business remained subdued due to the prolonged ban on vehicle imports and revenues were supported by spare parts and servicing business while the sales of ambulance gave an added advantage. 
The leisure and property segment grew its revenues during the quarter, primarily driven by the business generated from the travel bubble. 

By September 30 Softlogic Chairman, Ashok Pathirage held 41.07 percent stake in the company while N P Capital Limited, the investment vehicle owned by high net worth investor Nimal Perera entered the top 20 shareholders with 0.28 percent stake.