Sunshine Holdings sustains growth momentum in 1Q25

Diversified conglomerate Sunshine Holdings PLC saw its earnings improve for the first quarter of the financial year 2025 (1Q25) from the corresponding period of the previous year and the previous quarter due to revenue growth and a reduction in the net finance cost.

Building on the average gross profit margin trend in FY24, the margin remained at 29 percent in 1Q25, reflecting an improvement of 7.0 percent Year-on-Year (YoY). This growth was primarily driven by margin expansion in the pharmaceutical agency and pharmaceutical manufacturing businesses. 

Following the performance improvement in the healthcare segment, the Group reported a profit after tax (PAT) of Rs. 1.4 billion for 1Q25, a 3.6 percent decrease YoY compared to the same period last year. 

Profit attributable to equity shareholders closed at Rs. 936 million, an increase of 2.3 percent YoY.

The Group recorded a consolidated revenue of Rs.14.2 billion during 1Q25. The revenue increase was due to growth in Healthcare, despite contraction in both Consumer and Agri sectors.

The Group’s Healthcare sector emerged as the largest contributor to Sunshine’s topline, accounting for 53.1 percent of total revenue, followed by Consumer at 32.4 percent and Agribusiness at 14.5 percent.

“Despite positive signs in the broader macro economy, the average consumer’s disposable income remains constrained due to various adjustments in direct and indirect taxes, as well as income growth being lower than inflation over the last 2-year period. 

“The Group remains confident in its ability to navigate challenges and sustain resilience in the upcoming quarters,” said Sunshine Holdings CEO Shyam Sathasivam in a commentary that followed the 1Q25 results. During the period in review, the Group’s healthcare sector posted revenue of Rs.7.6 billion during the first quarter, a significant increase of 19.8 percent YoY backed by the increased topline of manufacturing and pharma businesses. 

Lina Manufacturing, the Group’s pharmaceutical manufacturing business, recorded revenue growth of 104.4 percent YoY, driven by higher volumes in the Metering Dose Inhaler (MDI) plant. Lina Manufacturing is now capable of supplying majority of the MDI requirement of the government.

The consumer sector, encompassing both export and domestic businesses, reported a marginal decrease of 1.9 percent YoY in revenue to close at Rs. 4.6 billion. However, the sector showed an improvement of 2.6 percent YoY compared to 4QFY24 post the changes to the VAT structure in Jan 2024. Revenue from the Branded Tea and Confectionery businesses declined by 16.9 percent YoY, primarily due to a drop in sales volume. 

The export business recorded a 31.1 percent increase in revenue due to heightened demand from key clients and reduced tea costs.
The Agribusiness sector of the Group, represented by Watawala Plantations,  reported a revenue of Rs. 2.1 billion, reflecting a 12.1 percent YoY contraction.  This stemmed from a 13.8 percent YoY contraction in the palm oil business. 

The dairy business recorded revenue of Rs. 326 million. The recovery of milk production volumes and reduced feed cost resulted in the dairy business recording a PAT margin of 8.2 percent in 1Q25, compared to negative 12.8 percent in the same period last year.

Moves to amalgamate with packaging subsidiary

Sunshine Holdings PLC on Friday disclosed that its board resolved to amalgamate with its fully owned subsidiary Sunshine Packaging Lanka Limited.

The amalgamation will take effect on 1 October 2024 and will be carried out in terms of section 242 (1) of the Companies Act No. 7 of 2007. By the terms of this amalgamation, Sunshine Holdings PLC will amalgamate all assets and liabilities of Sunshine Packaging Lanka Limited and the amalgamated company will be Sunshine Holdings PLC. 

The current directors of Sunshine Holdings PLC will remain as directors of the amalgamated company.