Sri Lanka Hemas profits hit by start-up losses, interest costs

June 05, 2009 (LBO) – Sri Lanka’s Hemas Holdings said group net profit fell 31.7 percent to 775 million rupees in the 2008-09 financial year from a year ago largely owing to start-up losses and finance costs of new investments.

Group revenue rose 8.3 percent to 15.3 billion rupees in the financial year ended March 31, 2009, the company said in its annual report filed with the Colombo stock exchange.

Chairman Lalith de Mel said new initiatives reduced profits by 135 million rupees but that Hemas went ahead with planned investments despite the economic crisis so that it could grow faster when the economy recovers.

The group’s core FMCG (fast moving consumer goods) and pharmaceutical businesses did well while its power sector continued to make an important contribution to profit and transportation posted strong growth.

FMCG sales went up 11 percent while pharmaceutical sales rose 19 percent during the year.

Chief executive Husein Esufally said the Hemas group completed investment projects amounting to three billion rupees in value during the year.

These included hospitals in key towns outside Colombo, a mini-hydro power plant, a consumer goods production facility, and an innovation centre.

“The drop in earnings is largely attributable to planned start-up losses and finance costs associated with our new initiatives and the absence of any appreciation in the fair value of investment properties,” Esufally said.