Softlogic Holdings records Rs. 15.2 bn revenue in 1Q FY18

Softlogic Holdings recorded a revenue growth of 6.2% posting Rs. 15.2 bn in 1QFY18 from Rs14.3 bn in 1QFY17. The results were resilient despite tightened monetary policy, contracting purchasing power and inclement weather, all contributing to lackluster demand.

The prime contributors to the Group top line were Retail (32.0%), ICT (25.6%), Healthcare Services (19.9%), Financial Services (16.7%) and Automobile (3.0%).

The Leisure sector is expected to improve its contribution and reduce its overall losses in the periods to come with Mövenpick Hotel’s monthly trajectory of occupancy improving as anticipated while intermittent full occupancy in today’s context in both hotels, Centara Ceysands Resort and Spa and Mövenpick Hotel Colombo augurs positively for the sector.

Gross Profit improved strongly by 21.2% to Rs. 5.4 billion (Bn) reflecting a GP margin improvement from 31.5% in 1QFY17 to 35.9% in 1QFY18. Group synergies and economies of scale helped profitability.

The Healthcare sector was a key contributor to the Gross Profit growth during the period with increasing demand and bed occupancy in our four hospitals augmenting performance in an unprecedented manner.

Operating profit increased 34.5% to Rs. 1.8 Bn during the first three months of the financial year. An improvement in operating profit margins from 9.6% in the comparative quarter to 12.2% was witnessed in 1QFY18. Group’s continuous focus on cost discipline and efficiency measures led to the improvements in cost margins. Operational expenses increased 17.5% to Rs.4.0 Bn. Distribution costs declined 21.6% to Rs. 667.8million (Mn ) whilst administrative costs registered an increase of 30.6% to Rs. 3.3 Bn during the quarter particularly due to the new city hotel.

EBITDA for the quarter improved a strong 37.2% to Rs.2.5 Bn from Rs. 1.8 Bn in 1QFY17.

Finance Expenses increased 39.6% to Rs. 1.3 Bn during quarter primarily owing to increasing interest rates. Profit before tax improved 8.8% to Rs. 659.6 Mn pushing the profit after taxation for the first three-months of FY2017/18 to Rs. 429.6 Mn after a tax charge of Rs. 230.0 Mn (Rs. 99.1 Mn in 1QFY17).

Retail sector’s revenue was Rs. 4.8 Bn. Primary contributors to this sector continued to be Softlogic Retail and the Odel group. Branded apparel and accessories business performance continue to support Odel’s growth momentum. Operating profit increased 63.4% to Rs. 699.4 Mn during 1QFY18 reflecting an OP margin improvement from 9.0% in 1QFY17 to 14.4% in 1QFY18 owing to the Group’s stringent cost controls while expanding. Sector PBT improved strongly to Rs. 290.7 Mn.

Retail sector PAT reported a robust growth to Rs. 222.8 Mn during the quarter.