Tea plantations divestment boosts Sunshine Holdings’ profitability | Sunday Observer

Tea plantations divestment boosts Sunshine Holdings’ profitability

1 March, 2020
Vish Govindasamy
Vish Govindasamy

Boosted by the divestment of its tea plantations, diversified Sri Lankan conglomerate Sunshine Holdings PLC reported notable growth in bottom-line performances during the first nine months of the current financial year (9MFY20).

During this period, the Group posted a consolidated revenue of Rs. 15.8 billion, delivering a 32.3% Year-on-Year (YoY) increase in Profits After Tax (PAT).

Group’s top-line performance saw a decline in growth by 4.9% YoY, mainly due to the sale of the tea plantation business represented by Hatton Plantations PLC during the first quarter as well as the revenue contraction of Group’s consumer goods and Energy sectors.Group’s healthcare business emerged as the largest contributor to Sunshine’s top-line performance, accounting for 50% of total revenue, while consumer and agribusiness sectors of the Group contributed 26% and 19% respectively of the total revenue.

Profit after tax (PAT) for the period in review rose to Rs. 1.7 billion, which include a one-off gain from the sale of Hatton Plantations PLC, which amounted to Rs. 343 million.

The strong results were carried through to the Group’s Profit After Tax and Minority Interest (PATMI) which grew by 46.1% YoY to Rs. 1 billion. Group’s healthcare and agribusiness sectors were significant contributors to PATMI.

Sunshine Holdings Group Managing Director, Vish Govindasamy stated, “The notable growth in our bottom line is attributable to the strong contributions from the healthcare arm and Group’s execution of well-articulated strategies amidst tough market conditions that impacted all our business sectors.”

As the largest contributor to Group revenue, Sunshine Healthcare grew its revenue by 20.5% YoY to Rs. 8.2 billion on the back of pharma and medical devices sub-sectors. Sunshine’s Consumer brands – spearheaded by premium brands such as ‘Zesta’ and ‘Watawala Tea’ – recorded revenues of Rs. 4.2 billion, down 2.9% YoY.

The Group’s agribusiness sector, led by Watawala Plantations PLC (WATA) and Hatton Plantations PLC (HPL), recorded revenue decline by 40.2% YoY to Rs. 3.1 billion due to the divestment of HPL. However, the palm oil segment together with dairy recorded an 11.4% YoY growth mainly due to better performance of the palm oil sector driven by the shift in palm oil yield curve. Palm oil production was at 9.9million Kg for the 9MFY20 which was 11% higher than the same period last year.