Sri Lanka’s Softlogic Holdings returns to profits in FY22 despite economic crisis
Daily FT: Softlogic Holdings PLC has announced strong results across all business verticals in FY22 amidst heightened market volatility and economic woes.
Consolidated Annual Revenue surged by 35% to Rs. 111.2 billion and consolidated Gross Profit for FY22 improved 52% to Rs. 39 billion while Group EBITDA recorded a rise of 98% to Rs. 19.7 billion in FY22. Softlogic said that was primarily resulting from increased topline and stringent cost discipline.
The Group witnessed exchange losses at Retail, Leisure and IT sectors during 4Q FY22 due to the depreciation of the rupee. Net finance costs for the year, excluding exchange losses and gains, declined 13% to Rs. 4.9 billion due to the low interest rate regime.
Group PBT for the year recorded a near two-fold increase to Rs. 3 billion compared to a loss of Rs. 3.2 billion in FY21. Group PAT for FY22 achieved a 126% growth in profitability to Rs. 880 million in comparison to a loss of Rs. 3.4 billion in FY21.
Softlogic said revenue for Healthcare Services witnessed a 41% increase to Rs. 22.4 billion. Sector recorded an EBITDA growth of 75% to Rs. 7.2 billion in FY22 while closing the year with a PAT of Rs. 3.8 billion up 117% from FY21.
The Retail sector recorded a revenue growth of 33% to Rs. 57.8 billion during FY22 while EBITDA saw an increase of 274% to Rs. 7.4 billion.
Softlogic Life Insurance achieved a growth of 25% to Rs. 21 billion in FY22. The company said Gross Written Premium growth has been underpinned by steady demand for life and health products. The company achieved a PAT of Rs. 2.2 billion.
Softlogic Finance witnessed a growth of 147% in Net Interest Income to Rs. 1.4 billion during FY22. Total Deposits rose 7% to touch Rs. 15.6 billion while total assets improved 23% to Rs. 25.6 billion. The credit rating of the company was upgraded to (SL)BB Stable by ICRA Lanka during the quarter. The Financial Services sector achieved a topline growth of 27% to Rs. 23 billion in FY22 while PAT registered a growth of 170% to Rs. 1.3 billion for the year.
Commenting on the Group’s outlook Softlogic Holdings Chairman Ashok Pathirage said with the interlude of the current economic turmoil navigating through these uncertain times, especially for the retail sector, which is import-reliant, must be considered with a thinking that is outside-the-box.
“Therefore, we are looking at venturing offshore and setting up onshore assembly plants to supplement the dire need for forex generation as a means to rebalance competing ends. The duty barriers and increase in taxes which are a disincentive to consumers has to be reckoned with due to diminishing purchasing power,” Pathirage said.
“As we focus on premium and luxury brands, consumer behaviour generally runs inversely to normal demand and supply pricing. With more brand awareness, the trade-off between shrinking consumer income and maintaining brand consciousness would be a challenge. To overcome this, local brands are being developed creatively to substitute for the demand for imported brands,” Softlogic Chief revealed.
The profits recorded by Softlogic Holdings is indicative of the strength and growth of Sri Lanka’s private sector and the overall expansion in the country’s business potential. Sri Lanka is working towards positioning itself as a business destination in the South Asian region supported by the country’s geographical positioning in the Indian Ocean and the many trade agreements as well as concessions enjoyed by the country. The country’s overall economic expansion and increasing business/investment opportunities have attracted the attention of many foreign businesses/investors. They are also looking at forming partnerships or joint ventures with local businesses to expand operations within Sri Lanka as well as the region.
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