Sunshine bottom line hindered by sharp rise in finance cost despite strong revenue growth

Diversified conglomerate Sunshine Holdings recorded resilient revenue growth in a challenging macroeconomic environment, reporting notable top-line growth during the year ended 31

March 2023. 
Group’s healthcare and consumer sectors led growth while healthcare segment remained the major contributor to total group revenue in FY23.
Sunshine recorded a consolidated group revenue of Rs.51.9 billion for the year ended 31 March 2023, an increase of 61.3 percent over last year. Profit after tax (PAT) for the period in review was contracted by 28.0 percent to Rs. 3.6 billion. 

The gross profit improved by Rs.3.3 billion, up 31.9 percent YoY, compared to the previous year, driven by revenue growth. Gross profit margin for the period stood at 26.0 percent, a contraction of 580 basis points against the corresponding period last year.
The earnings for FY2023 stood at Rs.4.67 a share or Rs.2.26 billion compared to earnings of Rs.6.06 a share or Rs.2.72 billion in FY22.
For the final quarter of FY2023 (4Q23), the group recorded earnings of 12 cents a share or Rs.56.8 million compared to earnings of Rs.2.01 a share or Rs.900 million recorded for the corresponding quarter of FY2022.

The group’s bottom line was impacted by the heavy finance cost incurred. For the FY2023 the group recorded a net finance cost of Rs.985.9 million compared to Rs.9.2 million a year ago.
The group’s healthcare business emerged as the largest contributor to its revenue, accounting for 46.1percent of the total, while consumer goods and agribusiness sectors contributed 36.6 percent and 16.9 percent respectively of the total group revenue. The group EBIT closed at Rs. 7 billion, an increase of 23.0 percent YoY.

Commenting on the results, Amal Cabraal, Chairman of Sunshine Holdings said, “The group had to face and overcome tough economic factors and adverse market conditions which persisted throughout the year. These headwinds impacted some of the core sectors, and are expected to continue to do so in the short to medium term.”
 However, Cabraal highlighted the group’s commendable response to these challenges, adding, “Through robust cost management initiatives and process reengineering efforts, supported by the integration of digital technologies, Sunshine has delivered a strong performance in FY23. Despite the difficulties, the group has displayed resilience, and takes an optimistic outlook on fortifying operations to further strengthen overall performance.”

Healthcare sector recorded revenue of Rs. 23.9 billion during FY23, a significant increase of 36.7 percent YoY backed by the improved performance in pharmaceutical, medical devices and manufacturing segments. EBIT for the sector was Rs. 3.0 billion with PAT of the sector increasing by 
13 percent YoY.

Lina Manufacturing, the pharma manufacturing business, commenced commercial operations in the Metered Dose Inhalers (MDI) plant in July 2022, which was a significant milestone for the business. 
Consumer Goods sector reported 135.6 percent YoY increase in revenue to close at Rs. 19 billion in FY23. The revenue increase was predominantly driven by the addition of export business. The consumer brands Zesta, Watawala, Ran Kahata and Daintee continued to grow market shares, despite challenging consumer sentiment.
Agribusiness sector revenue increased by 35.4 percent YoY during FY21/22 to Rs. 8.8 billion, driven by the increase in palm oil NSA. PAT of the agri sector closed at Rs. 2.3 billion for FY21/22, down by 33.6 percent.