July 28, 2010 (LBO) - Earnings from power and pharmaceuticals helped Sri Lanka's Hemas Holdings to increase June 2010 quarter net profit by 61 percent to 291.5 million rupees from a year ago, a stock exchange filing said.
Sales rose 13.8 percent to 4.25 billion rupees during the period with other income and gains rising sharply by 267 percent to 50 million rupees.
"Revenue growth was driven by the pharmaceuticals business, hospitals and leisure, whilst growth in net earnings are largely attributable to power and pharmaceuticals, and the reduction of losses at hospitals," chief executive Husein Esufally said.
"The steady build up of our hospital business along with the anticipated performance in the hotel sector is expected to augment our already sound underlying businesses."
The group's fast moving consumer goods business sales grew by six percent during the quarter to 1.4 billion rupees but net profits fell five percent to 166 million rupees, mainly due to increased marketing investments.
"Despite the slow start, we anticipate a higher growth in sales volumes in the coming quarters," Esufally said.
"Our pharmaceuticals business showed good growth, with revenues increasing by 28 percent. The business successfully held its market leadership position with a 16.5 percent share."
The company is "aggressively pursuing" its strategy of expanding its presence in the over‐the‐counter (OTC) market with satisfactory results, Esufally said.
With steady build-up of patient flow, hospital revenues have increased by 55 percent in the June quarter from a year ago.
"We have also achieved the important milestone of making positive quarterly operating profits during the sixth quarter of operations since inception in end‐2008," Esufally said.
"Whilst patient satisfaction levels have seen a steady increase, we are also witnessing strong growth in important revenue generators such as laboratory, radiology, surgery and inpatient services."
Power sector profits have increased significantly, from eight million during the first quarter of last year to 60 million rupees for the quarter ended June 2010.
"Profit growth is partially attributable to the renewable energy segment, which almost doubled its profits from last year’s first quarter, and partially attributable to the absence of a significant overhaul in the thermal segment, which impacted last year’s profits," Esufally said.
Hemas group's two operational hydro power plants, which account for 4.6MW, performed well during the quarter.
It has started development of a 2.4MW hydro plant in Upper Magal Ganga which is expected to be complete during 2011.
Hemas group leisure sector revenues increased by 68 percent for the June quarter on the back of the tourism boom in post‐war Sri Lanka although its hotels remained in the red.
The 30-year island's ethnic war ended in May 2009 resulting in an immediate upturn in tourist arrivals.
Tourist arrivals have increased by 46 percent in the June 2010 quarter from a year ago and the hotel industry is enjoying increased room rates and occupancies, Esufally said.
"In view of the brighter industry prospects, we have embarked on an upgrading and repositioning plan for our existing resorts and a development plan to add new resorts to our portfolio."
The group is spending 500 million rupees to refurbish its Club Hotel Dolphin which is expected to be complete by September 2010 in time for the winter peak tourism season.
During the quarter, the group's Serendib Hotels sold part of its shareholding in Hotel Sigiriya to raise funds for some of its development plans.
source - www.lbo.lk
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