Overview
The Group recorded earnings of Rs. 3.0 billion, a 36.3 percent growth in consolidated earnings for the quarter with revenue increasing by 6.4 percent to Rs. 33.2 billion and operating profit increasing by 25.7 percent to Rs. 4.9 billion. Revenue growth was evident across all sectors, as the Group’s businesses leveraged efficiency improvements and enhanced competitiveness amid a cautiously rising consumer confidence. During the quarter, the net finance expenses of the Group decreased significantly by 47.4 percent to Rs. 271.2 million due to lower interest rates and the reduction of net debt as a result of improved cashflows.
Despite revenue shortfalls in the first two quarters, the Group achieved a significant revenue increase in the third quarter, reflecting the resilience and commitment of the Group to drive growth, resulting in a cumulative revenue of Rs. 87.6 billion. Cumulative earnings and operating profit increased to Rs. 5.5 billion and Rs. 9.9 billion, a growth of 20.9 percent and 12.5 percent respectively.
The company’s share price closed at Rs. 103.25, reflecting a notable 32.2 percent growth for the quarter. In line with the company’s commitment to delivering value to its shareholders, an interim dividend of Rs. 1.00 per share was declared on November 6, 2024, for the financial year ending March 31, 2025.
The Group’s commitment to sustainable business practices and impactful environmental and social initiatives was recognised when it was named as one of the Top 10 Best Corporate Citizens at the prestigious Best Corporate Citizen Sustainability Awards 2024, organized by the Ceylon Chamber of Commerce.
Consumer Brands
Driven by improving consumer sentiment, the sector witnessed moderate growth in volumes during the quarter, resulting in a marginal increase in revenue by 4.0 percent to Rs.16.1 billion. This growth in revenue combined with efficiency improvements contributed to increases in operating profits and earnings, recording Rs. 3.2 billion and Rs. 2.3 billion respectively. For the year, the cumulative revenue was Rs. 35.9 billion with operating profits of Rs. 5.7 billion and earnings of Rs. 4.1 billion.
Despite the challenges posed by downward price movements, the business successfully maintained its market shares across most categories, achieving marginal growth in a number of categories, along with improved profitability. The beauty categories experienced significant volume growth compared to the same quarter last year. The drive to introduce innovative offerings to consumers continued, with the relaunch of Velvet soap and the launch of Vivya sunscreen and Vitamin C range, as well as Velvet body wash Naturals range.
The Learning segment continued maintain market leadership despite being impacted by price competition and seasonality factors, with the new school term set to commence in late January.
In Bangladesh, notwithstanding the challenges posed by rising inflation and increased price sensitivity, ‘Kumarika’, the flagship Value-Added Hair Oil (VAHO) product has successfully maintained its strong customer loyalty.
Healthcare
The sector recorded an 8.7 percent growth in quarterly revenue amounting to Rs. 16.7 billion with operating profits increasing to Rs. 1.6 billion and earnings growing to Rs. 0.9 billion. Although the cumulative revenue was marginally below the previous year at Rs. 50.2 billion, operating profits and earnings grew to Rs. 4.4 billion and Rs. 2.8 billion respectively.
The Pharmaceutical Manufacturing business secured an extension to the buyback agreement for 2025, with new orders already confirmed. Driven by a commitment to innovation and expanding its own branded product line, Morison unveiled ‘CliniMor’—a new solution for the treatment of hypertension. The Distribution business onboarded Vexxa Lifesciences and Aculife, further strengthening its market dominance.
While the Hospital segment saw its outpatient revenue steadily increasing, the inpatient revenue experienced a decline due to lower admissions, which was a trend observed across the market. Plans for expansion at the two hospitals in Wattala and Thalawathugoda are progressing, with the planned acquisition of land for the expansion of the Thalawathugoda hospital being completed, marking a key milestone in our growth strategy.
Mobility
The sector reported revenues of Rs. 518.7 million for the quarter which is a growth of 12.6 percent. Operating profits increased by 23.2 percent to Rs. 344.5 million and earnings grew by 15.7 percent to Rs. 166.7 million. Cumulative revenue for the sector was Rs. 1.5 billion, which is a growth of 17.1 percent with operating profits growing by 42.6 percent to Rs. 1.1 billion and earnings increasing by 35.3 percent to Rs. 544.8 million.
The Maritime segment achieved a notable rise in cumulative revenue, due to both freight rates and volumes recording significant increases in the import and export operations compared to the previous year. In the Aviation segment, cargo revenue grew due to higher yields and expanded market share. However, passenger revenue faced a decline due to intense fare competition among key players.
Commitment to Sustainability
During the quarter, Hemas continued its focus on achieving its Environmental Agenda goals with the Group recording a notable milestone in its efforts to combat plastic pollution, collecting over 1.2 million kilogrammes of plastic waste to date, demonstrating its commitment to the responsible consumption of plastic and its 2030 target of collecting 100 percent of its plastic waste. Additionally, water intensity was reduced to 1.3 m³ per Rs. million in revenue, and Renewable energy usage reached 9.9 percent of total energy consumption.
The Group also made significant strides in empowering communities through its social initiatives, positively impacting over 49,000 families during the quarter and addressing pressing societal needs. Hemas Outreach Foundation initiated its 69th Piyawara Preschool in Matikotuwa, Dankotuwa. and successfully hosted its 23rd consecutive annual Piyawara Teacher Training Programme, bringing together 150 teachers for a three-day residential programme.
Outlook
With the completion of the debt restructuring process and the removal of the Restricted Default status will facilitate foreign investors re-entering the market, bringing much-needed investment to Sri Lanka. Following the successful conclusion of the Presidential and General elections, the new government has received a strong mandate, which paves the way for policy stability and the implementation of critical structural reforms aimed at accelerating economic recovery. These developments are vital in restoring financial stability, regaining investor confidence, and setting the stage for sustainable growth in the future. Additionally, the recent reduction in electricity tariffs and the proposed Pay As You Earn (PAYE) tax concessions are expected to boost disposable incomes, further stimulating consumer spending.
As the market conditions improve, we remain focused on meeting evolving consumer needs while ensuring long-term growth and value creation.
