Higher finance costs hinder Sunshine Holdings 1Q

Sunshine Holdings Chairman Amal Cabraal 

Diversified conglomerate Sunshine Holdings PLC continued to demonstrate resilience amidst prevailing macro-economic conditions, reporting a top-line growth of 14 percent YoY in the quarter ended June 30, 2023 (1Q24).
The Group recorded a consolidated revenue of Rs.13.4 billion during the first quarter of the current financial year with profit after tax (PAT) contracted by 10.6 percent YoY to Rs.1.4 billion as a result of, 32.4 percent YoY increase in admin and S&D expenses, and 93.5 percent YoY increase in finance costs during the period. 
The group recorded earnings of Rs.1.86 per share or Rs.914.4 million for 1Q24 compared to earnings of Rs.2.12 per share or Rs.1.04 billion recorded in the corresponding quarter of the previous year.

The revenue increase was mainly due to robust revenue growth in key sectors of the Group —Healthcare, Consumer and Agribusiness. 
The Group’s healthcare sector emerged as the largest contributor to Sunshine’s top-line, accounting for 47.2 percent of total revenue, with consumer at 35.1 percent, and agribusiness 17.6 percent of the total revenue.
During the period in review, the Group’s healthcare sector posted revenue of Rs.6.3 billion during the first quarter, a modest increase of 8.2 percent YoY backed by the increased top-line of both manufacturing and medical devices businesses. 
Lina Manufacturing, the Pharma manufacturing business of the Group, recorded an impressive revenue growth of 362.1 percent YoY, mainly driven by higher volumes in the Metered Dose Inhaler (MDI) plant. Group’s Healthcare sector EBIT was Rs.936 million. 
The consumer sector reported a 20.9 percent YoY increase in revenue to close at Rs. 4.7 billion in 1QFY24 and accounted for 35.1 percent of Group revenue for the period. 
Consumer local business showcased strong performance in 1QFY24 with the Group’s consumer brands continuing to grow market shares. Combined Tea category experienced a volume de-growth of 10.7 percent YoY in 1QFY24 mainly driven by the 26.1 percent volume contraction of the export business. Local volume of the tea category grew by 4.4 percent YoY during the period. 
Value growth for the Combined Tea segment was recorded as 25.0 percent YoY. Revenue of Confectionery segment grew by 7.4 percent YoY despite a volume contraction of 16.8 percent YoY.

The agribusiness sector of the Group, represented by Watawala Plantations PLC, reported revenue of Rs. 2.4 billion. The revenue growth was driven by the increase in palm oil volumes despite the dip in prices in line with the drop in global commodity prices. 
The PAT of the Agri sector closed at Rs.751 million for 1QFY23, up by 2.3 percent. Dairy business revenue grew YoY by 53.2 percent YoY due to increases in both sales volume and milk price.