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Favourable market conditions push Softlogic 2Q profits up 13%

16 November 2015 02:45 am - 0     - {{hitsCtrl.values.hits}}

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The diversified conglomerate, Softlogic Holdings PLC group (SHL) posted a net profit of Rs.116 million for the quarter ended September 30, 2015 (2Q15), up 13 percent from a year ago. 

The earnings per share (EPS) increase to 15 Cents from 13 Cents, the interim results released to the Colombo Stock Exchange (CSE) showed. 

The performance was mainly driven by the group’s key segments – retail, information technology and healthcare as the lower taxes, access to easy finance and higher disposable incomes pushed up the demand. 

The group also followed stringent cost controls as the operating cost margin improved to 23.6 percent from 30.2 percent a year ago while the operating profit margin grew from 9.1 percent to 11.4 percent. 

Further the group Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)  margin improved 14.52 percent from 13.89 percent. 
However, the SHL share closed 10 cents or 0.66 percent down at Rs.15.10 at yesterday’s close. 

The group top line rose by 52 percent year-on-year (yoy) to Rs.13.2 billion during the quarter for which the retail and the information technology segments contributing 33 percent and 28 percent respectively. 

While the acquisition of the iconic retailer, Odel PLC contributed to the growth in the retail segment, the increasing footfall in the existing stores too supported the revenues. 

The segment made a net profit of Rs.151.5 million, up from Rs.57.5 million a year ago. 

The group’s information technology segment increased its revenue by 94 percent yoy to Rs.3.7 billion during 2Q’16 mainly due to the sales of Samsung mobile handsets while the company became distributors for HTC, Nokia and Microsoft Lumia. The segment net profit rose by 13 percent yoy to Rs. 122.5 million.

“Our island wide distribution channel, and the unparalleled customer care and after sales service are key strengths supporting the newly initiated brands,” said the group Chairman, Ashok Pathirage in an earnings release. 

Healthcare segment revenues increased by 14 percent yoy to Rs. 2.4 billion while its net profits rose by 4.4 percent yoy to Rs.313.9 million during the quarter. Central Hospital Limited contributed 35 percent to the segment revenues followed by Asiri Surgical Hospital PLC and Asiri Hospital Holdings PLC with 30 percent and 28 percent share. The company is now constructing another 151-bed hospital in Kandy of which the constructions to be completed in one and half years. 

The leisure sector managed to narrow its after tax losses to Rs.46.8 million from Rs.59 million from a year ago but the segment revenue rose 69 percent yoy to Rs. 210.5 million mainly driven by Ceysand Resorts as the off-peak September quarter saw an occupancy rate of 72 percent. However, “the healthcare and leisure sectors were adversely affected by the Rupee depreciation due to the foreign currency denominated debt in the books. Nonetheless, the Leisure sector’s foreign currency receipts constituting a natural hedge are also encouraging” Pathirage added. 

The financial services segment saw its net profit narrowing by 42 percent yoy to Rs. 150.2 million on a revenue of Rs.2.2 billion, slightly up from Rs.2.1 billion a year ago. The segment comprises of Asian Alliance Insurance PLC, Softlogic Finance PLC and Softlogic stockbrokers of which the performance was hampered due to unfavorable trading conditions in the CSE. 

The group’s automobile segment increased its losses to Rs.27.9 million from Rs.11.9 million a year ago but the segmental revenues grew by 58 percent yoy to Rs.242 million as the higher vehicle imports bode well for the company. Meanwhile the SHL group made a net profit of Rs.199.7 million for the six months ended September 30, 2015 (EPS of 26 Cents) , up 39 percent a year ago. 

The group top line grew by 57 percent yoy to Rs.26.2 billion. As of end September, Pathirage held 41.59 percent stake in the group being the single largest shareholder while the State controlled private sector pension fund, Employees Provident Fund held 0.93 percent stake being the seventh largest shareholder. 
 
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