Hemas Holdings profit after tax up 17.3% to Rs. 976.8m

Hemas Holdings Limited (HHL) recorded Rs.976.8 million profit after tax in the financial year 2005-6, a 17.3%, increase compared to the previous year. The company revenue increased by 7.2% to Rs.9.4 billion during the period.

Presenting the annual report CEO of the HHL Husein Esufally said that overall economic activity increased in the country, 6.2% high economic growth, recovering from the tsunami coupled with single digit inflation and stable exchange rate helped to boost industry growth of the company's Fast Moving Consumer Goods (FMCG) and health care businesses.

The philosophy of the HHL is long-term shareholder value created by delivering a superior Return on Equity (ROE) by way of sustained earnings growth. For the year we have achieved 24.6% ROE and the challenge the company faces is maintaining this high return while pursuing accelerated growth, Esufally said.

HHL shares delivered a total return of 29.9% and by the end of the financial year the HHL share price closed at Rs.110.75, he said.

The FMCG sector had a great year. Strong industry growth coupled with market share helped revenue grow by 10.2% . Earnings grew at a faster rate of 11.8 despite higher taxation.

Most of our key brands did well, specially Baby Cheramy which recorded significant gains in the market share. HHL focused on food and homecare where it has increased its presence largely through acquisitions and the company intends to take advantage of the incentives offered under the government's program to encourage industries to set up outside the Western Province, he said.

Esufally said that the pharmaceutical business of HHL maintained its leadership position in the private sector market. The transport sector which consists of airline representation, travel agency and freight management achieved an excellent profit.

Leisure sector recovery is in sight. The low occupancy in resort hotels during most parts of last year showed the slower post tsunami recovery.

GW