Healthcare, agribiz drive Sri Lanka’s Sunshine Holdings’ revenue to Rs. 11 billion.
The Morning: Diversified Sri Lankan conglomerate Sunshine Holdings PLC (CSE: SUN) demonstrated resilience amidst prevailing macro-economic conditions by recording a consolidated revenue of Rs. 11.7 billion during the first quarter of the current financial year (1QFY23) with profit after tax (PAT) growing 54% to Rs. 1.6 billion while reporting a top-line growth of 59% year-on-year (YoY).
The revenue increase was mainly due to significant revenue growth in the healthcare and agribusiness sectors together with the acquisition of a tea export business to strengthen its consumer sector.
Commenting on the performance, Sunshine Holdings PLC Chairman Amal Cabraal said: “The challenging macroeconomic conditions have impacted the country’s economy in an unprecedented manner. For businesses in Sri Lanka, facing and overcoming the numerous challenges posed by the ongoing economic crisis has been and will be an extreme test of resilience and readiness.
“However, demonstrating great resolve, resilience, and an entrepreneurial spirit, the Sunshine Group has found innovative solutions to overcome wide and varied challenges. This has enabled the group to post sound results for the quarter. It is inevitable that the business will continue to face numerous uncertainties in the short to medium term, and therefore, all sectors of the group will have to remain nimble and sharp in responding to the challenges.”
The group’s healthcare sector emerged as the largest contributor to Sunshine’s top line, accounting for 50% of total revenue, with consumer goods at 33% and agribusiness at 16% of the total revenue.
During the period in review, the group’s healthcare sector posted revenue of Rs. 5.8 billion during the first quarter, a significant increase of 46% YoY backed by the price increases to reflect the depreciation of the rupee, despite volume contraction. The group’s healthcare sector earnings before interest and taxes (EBIT) for the sector were Rs. 743 million.
The consumer goods sector reported a 109% YoY increase in revenue to close at Rs. 3.9 billion in 1QFY23.
In April 2022, Sunshine Tea (Pvt.) Ltd., which is a tea export business, was acquired by the group and its performance was consolidated under the consumer goods sector with effect from 1 April 2022.
Excluding the new addition, revenue growth stood at 8%. Gross margins were impacted by the rising cost of raw materials, but EBIT margin has improved by 404 bps compared to the same period last year.
The agribusiness sector of the group, represented by Watawala Plantations PLC (WATA), saw a revenue increase of 32% during the first quarter compared to the same period last year. PAT of the agri sector closed at Rs. 734 million for 1QFY23, up by Rs. 10 million compared to the same period last year.
However, EBIT decreased by Rs. 27 million (3% contraction YoY) owing to increased cost of bought crops and reduction in crop volumes – a result of the unavailability of fertiliser for the last two years.
Sunshine Holdings PLC contributes to “nation-building” by creating value in vital sectors of the Sri Lankan economy – healthcare, consumer goods, and agribusiness.
Established in 1967, the group is now home to leading Sri Lankan brands such as Zesta Tea, Watawala Tea, Ran Kahata, Daintee Confectionery, and Healthguard pharmacies with over 2,300 employees and revenue of Rs. 32 billion in FY22. The business units comprise Sunshine Healthcare Lanka, Sunshine Consumer Lanka, and Watawala Plantations PLC, which are leaders in their respective sectors, with many of them certified as a “Great Place to Work” in 2022.
The performance of Sunshine Holdings is yet another indication of the strength and growth of Sri Lanka’s private sector. It also indicates the growing business potential in the country. The respective Sri Lankan business has recorded profits despite many challenges faced by the country during the past few years including a global pandemic. Hence, the performance of Sunshine Holdings, like many other businesses in the country, portrays the overall strength and resilience of Sri Lanka’s economy. The country’s economy is on a recovery path with key economic sectors recording a steady growth while presenting new business/investment opportunities. Sri Lanka’s geographical positioning in the Indian Ocean and the strong trade ties have helped position the country as an emerging business destination in the South Asian region. The expanding opportunities present lucrative business/investment opportunities to foreign businesses/investors. Foreign businesses could also look at forming partnerships or joint ventures with local businesses to expand operations.
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