The weakness in Sri Lanka-based diversified conglomerate Hemas Holdings PLC’s (Hemas, AA-(lka)/Stable) first-quarter financial results is temporary, and is mainly due to the cash flow seasonality of its new school stationary business, Fitch Ratings says.
The agency expects Hemas’ performance to improve during the remainder of fiscal year to end March 31,2019 (FY19), and we have therefore maintained our expectations that the company will achieve revenue growth of 21% and EBITDAR margin of 13% for the full year. Operational challenges in Hemas’ fast-moving consumer goods (FMCG) business in Bangladesh also played a part in the company’s underperformance in 1QFY19, although we believe that earnings from this segment should also improve. “We expect the Bangladesh operation to benefit from Hemas’ investments in the distribution network and product re-launches in the past few months,” Fitch Ratings said.
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