~ Healthguard outlets to be more than doubled by 2018 and Sunshine Healthcare to target 15% market share in healthcare retail – Chairman Munir Shaikh
Boosted by strong Profit After Tax (PAT) growth of 16.3% year-on-year (YoY) to LKR 1,049 million for the nine months ending 31st December 2015 (9MFY16), diversified conglomerate Sunshine Holdings PLC has announced further expansion plans particularly centred on its fast-growing healthcare business represented by Sunshine Healthcare Lanka Ltd. (SHL).
Despite many challenges especially in its agri operations, reflecting its solid fundamentals, Sunshine Holdings achieved a 4.8% YoY improvement in consolidated revenue which grew to LKR 12.8 billion for 9MFY16 and Profit After Tax and Minority Interest (PATMI) growth of 24.6% YoY to LKR 509 million.
The healthcare sector, with the single largest contribution of 41.2% to group revenue in 9MFY16, grew even beyond management expectations despite challenges including the depreciation of the Rupee, improving revenue by 17.2% YoY to LKR 5.3 billion in 9MFY16. The Pharma sub-segment (representing 66.1% of Healthcare Revenue) in particular recorded revenue growth of 16.2% YoY to LKR 3.5 billion, thereby significantly outperforming overall market growth (of 12.5% YoY as per IMS data).
According to Sunshine Holdings Chairman Munir Shaikh, a veteran with over 40 years of experience in the pharmaceutical industry and the current Chairman of the global pharmaceuticals giant – Abbott – in India and Pakistan, the diversified conglomerate will further strengthen its operations in healthcare retail (represented by Sunshine Healthcare’s fully-owned subsidiary – Healthguard) through new investments, while also placing greater emphasis on wellness and beauty, in which margins are more attractive.
“Sunshine Holdings expects to more than double the outlets of Healthguard – from 21 to 50 by the 2018 financial year while also placing emphasis on product segments with higher margins. By pursuing growth via other avenues too – including by securing partnerships for reputed new agencies – Sunshine Healthcare is targeting 15% of the country’s market share in healthcare retail by 2018,” Shaikh noted. In addition to expansion of the Healthguard outlet chain during 9MFY16 by seven outlets – three new full service stores and four express stores – Sunshine Healthcare launched an online Healthguard store as well in December 2015.
Shaikh also expressed confidence in the strong growth potential of FMCG, packaging and renewable energy business units of Sunshine Holdings. FMCG, the diversified conglomerate’s fastest-growing unit, reported revenue of LKR 2.5 billion for 9MFY16, up 19.7% YoY, on the back of both volume and price growth. The branded tea business within FMCG sold 2.7 million kg of branded tea, up 16.3% YoY, primarily driven by its largest brand ‘Watawala Tea’ – the number one selling tea brand in Sri Lanka.
Packaging revenues amounted to LKR 262 million, up 40.9% YoY in 9MFY16, with the printed sheet business ramping up its contribution to revenue. Revenue for the Renewable Energy division too improved by 18.4% YoY to LKR 104 million in 9MFY16, due to heavy rainfall and improved plant and grid stability in the 3QFY16.
The Sunshine Holdings Chairman expects ventures to be launched in the near future to complement the strong growth of many of the existing business segments. The diversified conglomerate’s Agri business arm and the country’s largest Palm Oil producer – Watawala Plantations PLC – will formally commence work on a dairy farm in March 2016, which is expected to be eventually expanded to 1,000 dairy cattle, thereby also achieving further diversification, which augurs well for the company considering the downturn in the plantation sector particularly following the commodity price crunch.
Despite the severe challenges, the Agri business sector of the diversified conglomerate enhanced PAT by 7.7% YoY to LKR 439 million for 9MFY16 and also substantially reduced losses in tea to LKR 213 million in 9MFY16, compared with LKR 253 million in the same period of the previous year. Achieving a PAT of LKR 558 million in 9MFY16, the Palm Oil segment was the largest contributor to profits and managed to more than compensate for losses in both Tea and Rubber.
Sunshine Holdings PLC is a diversified holding company contributing to ‘nation building’ by creating value in vital sectors of the Sri Lankan economy – including healthcare, agribusiness, fast moving consumer goods and renewable energy. The group, which provides employment to approximately 12,000, generates over US$ 120 million in revenue. Sunshine Holdings is consistently ranked among the LMD Top 50 companies in Sri Lanka and is also one of the country’s largest tax payers – contributing over Rs. 500 million to the state’s coffers annually.
Sunshine Holdings Chairman, Munir Shaikh (left) and Group MD, Vish Govindasamy