Sunshine Holdings reports strong 1Q; but concerned over chemical fertilizer ban

Sunshine Holdings PLC reported robust sales in the three months to June (1Q22) powered by its expansive interests into healthcare, consumer goods and agri businesses, but the company is concerned that the recent ban on chemical fertilizer could have a bearing on its plantation sector represented by tea, rubber and palm oil.  

The company known for its Watawala and Zesta tea reported revenues of Rs. 7.35 billion in the April - June quarter, up 54 percent from the same period last year and Rs.6.9 billion in the company’s fourth fiscal quarter ended in March 2021.

The group’s healthcare business which engages in pharmaceutical and medical devices propelled the group top-line the most with sales of Rs.4.0 billion, logging an increase of 54.4 percent. The company also runs the well known, ‘Healthguard’, health and wellness type convenience stores across city limits and some outskirts. 
The company’s January merger with Akbar Pharmaceuticals in which Sunshine holds 72 percent stake also contributed positively into both top and bottom-line of the group, the company said.  

Meanwhile the group’s consumer business consisting of tea and confectionary received a further impetus from its August 2020 acquisition of the confectionary maker, Daintee Limited, raising this unit’s revenues by as much as 67.5 percent to Rs.1.86 billion in the quarter. 

Group’s agri-business generated revenues of Rs.1.4 billion, up 44.2 percent from a year ago due to improved performance at its palm oil and dairy segments. But the company remains cautious of the potential impacts that could stem from the ban on chemical fertilizer on is plantations.  “Agri business may be challenged due to some regulations enacted recently, and however, the company is currently evaluating alternative approaches to mitigate the business impact and risks while ensuring the sustainability of businesses,” said V. Govindasamy, Group Managing Director at Sunshine Holdings in an earnings release, without direct referring to the specific regulation.
However the government maintained it has adequate chemical fertilizer stocks sufficient for the next 12 months and it recently decided to allow the importation of certain chemical fertilizer types under license which cannot be found or made domestically.  

Meanwhile the group’s renewable energy business represented by rooftop solar power generation reported revenues of Rs.11.04 million in the quarter compared to Rs.75.9 million in the year earlier period. 

The group in April divested its Mini Hydro Power business, under Waltrim Hydropower (Pvt) Ltd to Aitken Spence PLC. 

The group reported earnings of 74 cents a share or Rs.332.6 million in the April - June quarter compared to 72 cents a share or Rs.321.0 million in the year earlier period. 
Sunshine share ended 40 cents or 1.56 percent higher last Friday at Rs.26.00.