‘Hemas Holdings boosts profitability through efficiency in a challenging market’

Hemas Holdings PLC reported a cumulative revenue of Rs. 54.4 billion, with operating profits of Rs. 5.0 billion and earnings of Rs. 2.5 billion. The decrease in revenue compared to same period last year was a result of cautious consumer spending accompanied by several strategic downward price adjustments, particularly in the Consumer Brands segment.

However, the Group’s ongoing commitment to efficiency improvements alongside favourable foreign exchange movements, contributed to enhanced profitability margins. Additionally, the initiatives aimed at optimising working capital combined with the advantages of a declining interest rate environment, led to a further reduction in finance costs thereby boosting earnings.

The country’s GDP recorded a growth of 4.7 per cent while the local currency demonstrated resilience, appreciating against the United States Dollar to 299.36. Furthermore, the Average Weighted Prime Lending Rate (AWPLR) closed at 9.3 per cent. The Colombo Consumer Price Index experienced a deflation of 0.5 per cent, primarily due to easing of food inflation. However, despite these positive indicators, people faced considerable pressure on purchasing power due to high direct and indirect taxes, resulting in ongoing affordability challenges.

Consumer Brands

During the quarter, the strengthening of the domestic currency and declining global commodity prices have led to aggressive pricing and promotion strategies among industry players, intensifying competition in key categories. A strong focus on value-for-money (VFM) options continues, reflecting the current constraints on purchasing power.

The stationery market experienced heightened competition as new brands continue to emerge. This influx has prompted some players to reduce prices, often at the cost of compromising quality. As consumers navigate this landscape, their focus remains firmly on affordability, leading to a gradual shift in their purchasing habits. More specifically, there is a notable trend toward VFM offerings, as consumers seek products that deliver both quality and cost-effectiveness.

The Consumer Brands Sector reported a cumulative revenue of Rs. 19.9 billion while the operating profit and earnings Rs. 2.5 billion and Rs. 1.8 billion for the year respectively.

The Sector reported a revenue of Rs. 11.0 billion for the quarter, while the operating profits and earnings increased to Rs. 1.7 billion and Rs, 1.2 billion respectively due to the improved profitability margins compared to the last year. Despite the decline in revenue compared to the same period last year, a combination of margin improvement and cost rationalization initiatives led to overall growth for the businesses.

Home and Personal Care

Although overall industry demand declined, company witnessed improvements in overall market share, consumer reach and product availability this quarter. Increased emphasis on personal and beauty care, along with efficiency enhancements and supply chain optimisations resulted in increased profitability margins.

While competitive pricing and promotions were introduced in key categories, new product launches gained positive momentum, enhancing brand visibility and consumer engagement. This quarter marked the successful re-launch of Vivya, strengthening the brand’s presence in the market.