Health and Consumer Affairs Drive Sunshine Holdings’ strong FY21 performance – The Island
Diversified Sri Lankan conglomerate Sunshine Holdings (CSE: SUN) delivered resilient revenue and earnings growth in a macroeconomic environment affected by the pandemic, posting notable growth in earnings and results in the year ended March 31, 2021 (FY20 / 21). The Group’s Healthcare and Consumer sectors led growth while the Healthcare segment remained the main contributor to the Group’s total revenue during FY21.
Sunshine reported consolidated Group revenue of Rs 24.3 billion for the fiscal year ended March 31, 2021, an increase of 16.6% over last year. Profit after tax (PAT) for the period under review also increased to Rs. 2.5 billion, an increase of 38.5% year-on-year, and profit margins also increased to 10.4% compared to 8.8% from last year. These better results stem from the growth in turnover, the increase in margins in key sectors and the strategic measures taken by the group to rationalize operating costs and reduce financial charges.
The Group’s Healthcare activity emerged as the main contributor to Sunshine’s sales, representing 53% of the total, while the Group’s Consumer Goods and Agri-Food sectors respectively contributed 29% and 16% to sales. total business of the Group. Gross profit closed at Rs. 7.7 billion, up 25.2% year-on-year, supported by the contribution of the consumer goods and agri-food sectors. The group’s EBIT closed at Rs. 3.5 billion, an increase of 21.2% year-on-year.
Profit after Tax and Minority Interest (PATMI) increased 32.7% year-on-year to 1.5 billion rupees; the health sector made the largest contribution to PATMI, accounting for 37% of the total while agribusiness accounted for 30% of the total. The net asset value per share increased to Rs. 23.48 at the end of March 2021, from LKR 18.75 at the end of March 2020.
To increase exposure to its key sectors, which are defensive in nature, and maintain a healthy balance sheet, Sunshine Group’s Fitch rating has been revised upwards to “AA + (lka)”; Stable outlook, from “A (lka)” in January 2021 (reaffirmed in March 2021).
Commenting on the performance, Sunshine Holdings Group Managing Director Vish Govindsamy said as a group that Sunshine has faced challenges in some of its key industries and will continue to do so in the short to medium term due to the negative economic impact due to COVID-19 pandemics and subsequent closures.
“However, the Group’s robust cost management initiatives, process reengineering efforts supported by digital technologies to ensure overall efficiency and business continuity have helped Sunshine outperform last year’s results and generate strong performance in fiscal year 21, when the Group was able to bounce back from the negative impacts. brought about by a difficult macroeconomic economic environment. We are proud that the Group has remained resilient in the face of such difficulties, and we We remain optimistic about the consolidation of our operations to further strengthen the overall performance of the Group. All possible measures have been taken to ensure the sustainability and continuity of the company in the coming months, “commented Govindasamy.
During the period under review, the Group’s healthcare sector increased its revenue by 14.5% year-on-year to Rs. 12.8 billion. The sector saw growth in the pharmacy, medical device and retail subsectors with significant improvement in the second half of the year due to the recovery from the Covid-19 lockdown.
The pharmacy and medical device sectors achieved the highest quarterly revenue in the last quarter, while Healthguard, the retail arm of the healthcare sector, saw increased sales in the sector. mid-year 21, mainly due to increased consumer awareness of health and wellness. with the spread of Covid-19 in the country. The Pharma sub-sector, which contributed 66% to Healthcare revenue, grew 14.8% year-on-year in FY21. The reported PAT for healthcare was Rs 824 million in FY21, up 61.6% year-on-year with a 6.4% margin.
The group’s healthcare business merged with Akbar Pharmaceuticals in January 2021, making it Sri Lanka’s first fully integrated healthcare company with the addition of pharmaceutical manufacturing and R&D operations. After the transaction, Sunshine Holdings owns 72% of Sunshine Healthcare Lanka Limited, which was previously a wholly owned subsidiary, while Akbar Brothers Ltd owns the remaining 28%.
Led by brands like ‘Zesta’, ‘Watawala Tea’, ‘Ran Kahata’ and ‘Daintee’, the Consumer sector continued its impressive growth with revenues of Rs. 7.1 billion in FY21, an increase of 30 , 8% year-on-year and representing 29% of the group’s turnover over the period. The revenue growth is mainly due to the addition of the confectionery business through the acquisition of Daintee during the second quarter. PAT of the consumer segment grew 57.2% year-on-year, to stand at Rs. 467 million for FY21. After the acquisition, Daintee contributed 185 million rupees to the net result.
The Group’s agri-food sector, represented by Watawala Plantations PLC (WATA), saw its turnover increase by 2.5% year-on-year to Rs. 3.9 billion due to the increase in average net sales palm oil (NSA) and milk prices. The dairy segment, which started operations in 2018, made a profit in fiscal year 21, contributing 4% of the agribusiness sector’s PBT. In addition to the increase in NSA, the profitability of the dairy segment was also boosted by lean management and streamlining of feed costs, despite the increase in prices of key raw materials during the fourth quarter. The PAT for the agricultural sector increased by 120.2% to Rs. 1.6 billion.
In the food industry, the dairy business of Watawla Dairy Ltd (WDL) raised US $ 2 million in equity from SBI Japan for an 11% stake in the company in May 2021. The proceeds will be used for develop dairy operations and strengthen the leaf balance of WDL.
Renewable Energy division revenue was Rs. 440 million in FY21, up 40.8% year-on-year from Rs. 313 million in FY20 due to favorable weather conditions in the Hydro segment and the expansion of rooftop solar projects. In April 2021, the Group sold its stake in the Mini Hydro Power activity, under Waltrim Hydropower (Pvt) Ltd to Aitken Spence PLC with the aim of refocusing on its key sectors.
In March 2021, Sunshine Foundation for Good, the corporate social responsibility (CSR) arm of Sunshine Holdings, ordered two reverse osmosis (RO) plants in Galgamuwa in North West Province and Medawachchiya in Central Province. -North. More than 1,500 students and 5,000 inhabitants of the surrounding villages now have access to more than 20,000 liters of safe and clean drinking water per day thanks to these new RO plants.
To date, the Foundation has commissioned a total of eight IO factories in the Northwest, North-Central, South, Central and Uva provinces, giving more than 20,000 residents to Sella Kataragama, Kataragama, Ambanpola, Handaganawa, Rajanganaya, Galewela, Galgamuwa and Medawachchiya. access to drinking water.
Over the past fiscal year, Sunshine Holdings also solidified its position as a leading employer in the country after the company achieved coveted certification from The Great Place To Work (GPTW) institute – recognizing Sunshine Healthcare Lanka (devices medicines and pharmaceuticals), Watawala Dairy, Sunshine Consumer Lanka, Sunshine Tea and Sunshine Energy. The certification program assessed existing human resource practices and employee experience within the Group on the basis of the five principles of Credibility, Respect, Fairness, Pride and Comradeship. The GPTW certification was the culmination of carefully crafted human resource practices and values, applied consistently throughout Sunshine’s 50 years of business.