Diversified conglomerate lays groundwork for expansion by attracting FDI and via new investments in international FMCG operations and healthcare retail outlets
30th May 2016: Diversified conglomerate Sunshine Holdings PLC has posted a strong performance for the year ending 31st March 2016 (FY16), improving the Profit After Tax (PAT) of all its business segments, while laying the foundation for further expansion with a number of new investments and initiatives.
According to results issued to the Colombo Stock Exchange (CSE), for FY16, Sunshine Holding’ PAT grew to LKR 1,218 million, a significant 16.3% improvement year-on-year (YoY).
Net Asset Value per Share increased to LKR 42.78 as at end FY16, compared to LKR 39.24 at the beginning of the year (FY15). Earnings per Share (EPS) too improved to LKR 4.34 in FY16 from LKR 3.62 in FY15.
Despite challenges, particularly in the Agribusiness sector, Consolidated Revenue was up by 6.7% YoY to LKR 17,422 million. Three of the five divisions – Healthcare, Fast-Moving Consumer Goods (FMCG) and Packaging – reported double digit growth in revenue while the Renewable Energy division too improved its revenue. The Agribusiness sector enhanced its PAT despite a reduction in the top-line – as part of a strategic move to reduce volumes and further enhance focus on quality in the Tea sub segment.
Healthcare, represented by Sunshine Holdings’ fully-owned subsidiary and one of the country’s largest distributors in the healthcare space – Sunshine Healthcare Lanka Limited (SHL) – was the main contributor to group revenue in FY16 (accounting for 41.1% of the total). It expanded well above the growth of the overall market. Revenue was up by 17.9% YoY to LKR 7,161 million in FY16 while PAT was LKR 327 million, an improvement of 41.2% YoY.
The FMCG sector, represented by Watawala Tea Ceylon Limited (WTC), the country’s largest branded tea company, reported a Revenue of LKR 3,440 million for FY16, a growth of 18.0% YoY. This was on the back of both price and volume growth, the latter largely driven by Watawala Tea – the country’s single largest tea brand. PAT from FMCG grew 7.7% YoY, to LKR 423 million in FY16.
Agribusiness, represented by Watawala Plantations PLC – the country’s largest manufacturer of Palm Oil and one of the largest Regional Plantation Companies (RCPs) – saw its PAT expand to LKR 518 million, up by 32.5% YoY. The increase in profitability of the sector, despite severe challenges, was a result of a prudent strategic move by Watawala Plantations to cut down on its output of tea (which translated into reduction in Revenue), and to curtail losses by further improving quality.
Packaging and Renewable Energy Divisions – represented by Sunshine Packaging Ltd. and Sunshine Energy Ltd. respectively – too achieved substantial improvements in both the top line and the bottom line. Sunshine Packaging’s Revenue was LKR 362 million in FY16, an improvement of 34.1% YoY while its PAT was up by LKR 40 million – to LKR 16 million. Sunshine Energy expanded its revenue to LKR 120 million in FY16, a 6.9% growth YoY while its PAT too increased by LKR 12 million to LKR 32 million.
“Sunshine Holdings takes much pride in this strong financial performance, particularly since it represents bottom line growth across all our business segments, despite significant challenges in some sectors,” Sunshine Holdings Group Managing Director (GMD) – Vish Govindasamy said. “More importantly, these results have been achieved while laying the foundation for sustainable future growth – through investments aimed at enhancing the competencies of our staff, distribution networks and infrastructure.”
In FY16 the FMCG segment invested LKR 88 million for international expansion alone and the international marketing team will be leveraged to expand the lucrative export business.
In Healthcare, a number of new agencies are expected to be added during FY17 to further strengthen the product portfolio. The rapid expansion of the outlet network of Healthguard, the country’s premier urban pharma, wellness and beauty retail chain, fully owned by Sunshine Holdings’ healthcare arm will continue, with six new outlets expected to be opened in FY17. Therefore together with the eight Healthguard outlets opened in FY16, the network will stand at 30 outlets by end FY17. The Healthguard online store, opened during FY16 is also expected to support future top and bottom line growth.
As part of its efforts to become the first healthcare retailer in Sri Lanka to provide a service of an international standard, Healthguard also opened a dedicated training centre in early FY17, further stepping up its HR initiatives to enhance the competencies of employees.
Members of the Sunshine Holdings Group have also succeeded in attracting substantial Foreign Direct Investment (FDI) recently to further enhance and expand operations. The Group set up a commercial dairy operation in March 2016 – Watawala Dairy Ltd. – together with Duxton Asset Management, with a USD 3 million FDI infusion from the latter. In May 2016, the packaging arm of the group – Sunshine Packaging Lanka Ltd. also attracted FDI of USD 2 million from Primeco Holdings Limited – a conglomerate incorporated in Hong Kong.
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.