Hemas profits pick up amidst inflationary pressures for its key personal and healthcare units

Healthy returns from the personal and healthcare units boosted Hemas Holdings net profits up eight percent to Rs. 149 mn during the second quarter ending 2005.

The family controlled group made a Rs. 258 mn net profit (up one percent) for the six months ending Sept. 30, while turnover jumped 25 percent to Rs. 3.8 bn over the previous year, the company said Thursday.

Hemas’ core operations are in health and personal care products, which together contribute over 50 percent of total earnings. It also has interests in leisure, transportation, garments and power generation.

But growth from personal and healthcare segments is under threat from rising inflation and sluggish economic growth.

Excluding last year’s non-recurring capital gains of Rs. 33 mn, net profits have grown 13 percent, CEO Husein Esufally told shareholders.

Personalcare sector brought in the bacon contributing 67 percent of the group’s second quarter profits. Esufally says the healthy numbers came in an environment where industry growth was stagnant.

Hemas acquired the ‘Fems’ brand, giving the sector a foothold in the feminine hygiene category where it sees ‘substantial opportunity for growth’. The distributor agreement with Proctor & Gamble was terminated due to increased conflicts within the product portfolio, which were incompatible with the future growth strategy of the sector.

Net profits from healthcare segment were up 47 percent to Rs. 28.3 mn during the six months period. The sector spun off its surgical business into a different unit to provide better focus.

Transport unit posted a 55 percent net profit growth of Rs. 22.5 mn, bucked by the aviation sector.

However, the leisure sector posted mediocre returns falling 55 percent to Rs. 13.4 mn for the six months period. Esufally says the group is sprucing up its hotels, while the inbound tour operations has secured several new accounts, which are expected to enhance returns during the next six months.

He said the leisure sector is geared to take advantage of the booming tourism industry, which is expecting a record 550,000 visitors this season.

The strategic business unit which includes power and apparels, continued to underperform falling 101 percent to Rs. 68 mn during the six months period.

The apparel sector posted a poor performance, but good news came from its 50 percent 100 MW power unit Heladhanavi, which was commissioned two months ahead of schedule. The power project is expected to drive sector earnings during the next six months.