Softlogic Holdings PLC Group revenue grew 6.4% to Rs. 31.1 billion during the first half of the financial year with the quarter also registering a similar growth of 6.5% to Rs. 15.9 billion.
Group top line for the six months was led by Retail (30.8%), ICT (26.4%), Healthcare Services (19.1%), Financial Services (16.5%) and Automobile (3.8%).
Sales contribution from the leisure activity has been trending up as two of the Groups’ hotels reported healthy occupancy levels during the quarter. Mövenpick Hotel Colombo is yet to contribute to Group profitability.
“Adverse weather conditions affecting retail demands, the high interest rate regime, in the absence of the insurance transfer for the quarter and the general depressed economic climate, combined together posed a challenge for the Group.
Nonetheless, the future outlook will depend on several macroeconomic factors but the Group is positioned well enough to overcome such hurdles,” Chairman Ashok Pathirage said.
“As business is cyclical, third quarter results are more robust than the second quarter due to the optimism of Christmas sales, which the Group will undoubtedly benefit from during this period.”
Gross Profit improved 21.2% to Rs. 11.2 billion during the 1HFY18 indicating a healthy improvement in GP margin from 31.5% in 1HFY17 to 35.9% in 1HFY18.
The quarter too registered similar GP margin improvements taking the quarterly gross profit to Rs 5.7 billion (up 21.1%). Cost control measures and economies of scale helped maintain profit margins amidst systemic challenges.
Distribution and administrative expenses increased 15% and 16.8% to Rs. 1.6 billion and Rs. 6.4 billion respectively during 1HFY18.
Consequently, operational expenses for the cumulative period increased 16.4% to Rs. 8 billion while a 16.7% growth was denoted during the quarter to Rs. 4 billion.
Quarterly operating profit increased 44% to Rs. 2.2 billion taking the cumulative operating earnings to Rs. 4.1 billion (up 39.6%). A strong improvement in operating profit margins was seen during the first half of the financial year from 9.9% in the comparative period to 13% with the quarter too witnessing an improvement from 10.2% in 2QFY17 to 13.9% in 2QFY18.
Group EBITDA for the quarter improved 42.1% to Rs. 2.9 billion while the cumulative EBITDA increased 40% to Rs. 5.4 billion. Profit before tax for the cumulative period was Rs. 1 Bn while the quarter reported a PBT of Rs. 358.1 million. Profit after taxation for the first half of FY2017/18 closed at Rs. 677.9 million with the quarter concluding with a PAT of Rs. 248.2 million. Retail sector’s cumulative revenue was Rs. 9.6 Bn with the quarter reporting Rs. 4.7 billion. ODEL and Softlogic Retail continued to be dominant contributors to the sector performance. Retail sector cumulative PAT reported a strong growth of 21.8% to Rs. 313.8 million despite the quarter being dragged down by lacklustre retail demand to report a PAT of Rs. 91 million.
Hospital group’s topline was led by Central Hospital Ltd., (36% contribution), followed by Asiri Hospital Holdings PLC (31% contribution) and Asiri Surgical Hospital PLC (26% contribution). ICT sector revenue was disturbed with the slowdown of the Microsoft handset business and with fierce competition faced by Samsung.
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