Sri Lanka’s Softlogic Plc records in post-tax profits for FY 2019 despite difficult business environment
Softlogic Holdings Plc of Sri Lanka has reportedly defied a difficult business environment with depressed business and consumer sentiment, caused largely by high interest rates and a depreciating rupee, to record Rs. 3 billion in post-tax profits for FY 2019.
The company has stated that this is a 30% increase year-on-year, while showing a 32% post-tax growth of Rs. 855 million during the fourth quarter.
Despite challenges, the resilience of the conglomerate’s business model demonstrated steady profitability, the company has noted.
“We faced numerous challenges stemming from the external environment during the financial year 2018/’19, which was worsened by political unrest during 3QFY19. A general slowdown of the economy and policy uncertainty diminished business sentiments, which was further exacerbated by the USD/LKR and interest rates reaching a higher range,” the company has stated in its Earnings Review.
The company has stated that 100% cash margin requirement affected the retail sector and the 200% cash margin requirement adversely affected the automobile sector. Furthermore, the most recent Easter Sunday terror attacks caused significant economic setbacks. The aftermath of this incident affected Softlogic businesses, with retail stores being closed during the period of unrest.
The leisure sector has been devastated by lack of interest in Sri Lanka as a safe tourist destination, the Review has further noted.
Nonetheless, consolidated turnover has reported a 14% increase in revenue to Rs. 75.1 billion. The quarterly Group revenue witnessed a 30% growth to Rs. 21.6 billion.
Primary contributors to Group top-line for the financial year were Retail (50% contribution), Healthcare Services (18%), Financial Services (18%) and IT (5%) followed by the non-core sectors – Automotive and Leisure.
OSL take:
The profits recorded by Sri Lanka’s Softlogic Plc despite domestic economic challenges indicates the strength and growth of the local private sector. It further indicates that with the proper business plan, companies could prosper in the island nation. Therefore foreign businesses could explore business opportunities in Sri Lanka.
| Article Code : | VBS/AT/07062019/Z_2 |