Hemas Group Reports Rs. 1.2Bn Profit as Earnings Surge 26% in Strong Quarter

Hemas’ Performance Momentum Continues in FY 25/26 with 26% Earnings Growth in Q1

Performance Review for the Three Months ended 30th June 2025

Overview

The Group sustained its positive trajectory from the previous year, delivering a resilient performance for the quarter achieving a cumulative revenue of Rs. 28.5 billion. Operating profit and earnings grew by 6.9 % and 26.1% respectively, reaching Rs. 2.1 billion and Rs. 1.2 billion for the quarter. The year on year improvement in Group earnings was driven by stronger topline growth, improved gross profit margins, and reduced finance costs. Revenue in the Consumer Brands Sector recorded a marginal decline compared to the previous year, primarily due to the impact of prior-year strategic price adjustments.

During the quarter, the equity market demonstrated strong momentum, with the All Share Price Index (ASPI) and the S&P SL20 Index posting year-on-year gains of 48.4% and 49.2%, respectively, reflecting improved investor sentiment. Following the share sub-division, Hemas share continued its upward trajectory, supported by heightened interest from local retail investors. The share closed the quarter at Rs. 30.50, marking a robust year-on-year gain of 83.1%.

Operating Environment

Sri Lanka made a significant stride in its economic recovery during the quarter, with the International Monetary Fund (IMF) Board completing the fourth review under the Extended Fund Facility (EFF). This milestone facilitated the disbursement of the fifth tranche amounting to USD 315 million, bringing the total disbursement under the programme to approximately USD 1.7 billion. Concurrently, the Government achieved progress on its external debt restructuring efforts, successfully renegotiating bilateral debt obligations with France and India—further strengthening the country’s external debt profile.

Deflationary trends that began in September 2024 persisted into the quarter, though signs of moderation were observed towards the end of the period, with headline inflation recorded at -0.6%. The Sri Lankan Rupee depreciated marginally by 1.9% against the USD, supported by continued foreign inflows, Central Bank intervention, and subdued inflationary pressures. Reflecting the soft inflation outlook, the Central Bank reduced the Overnight Policy Rate by 25 basis points in May 2025, resulting in a further decline in the Average Weighted Prime Lending Rate (AWPLR) to 8.1% per annum.

Sri Lanka’s economy recorded a year on year growth of 4.8% in the first quarter of 2025, marking the seventh consecutive quarter of positive growth since the third quarter of 2023. This sustained momentum was driven by exchange rate stability and lower interest rates, although growth in the agricultural sector remained subdued.

Global economic growth is expected to moderate in 2025, impacted by escalating trade barriers, increased policy uncertainty in key markets, and ongoing geopolitical tensions. In commodity markets, although crude oil and palm oil prices remained lower year on year, prices of both commodities trended upward during the quarter.

Consumer Brands

The Sector continued to strengthen its market presence through focused sales and promotional initiatives, which supported volume recovery across key categories. Despite a marginal 2.6% year-on-year decline in revenue primarily due to price adjustments taken previously that were driven by input cost deflation, the sector maintained its profitability through a combination of portfolio mix optimisation and sustained process improvements. Operating profit stood at Rs. 719.1 million, while earnings grew by 13.6 % to Rs. 665.6 million.

Home and Personal Care – Sri Lanka

Beauty and Personal Care recorded encouraging volume growth during the quarter, driven by strong performance in key brands such as Vivya, Velvet Body Lotion, Dandex, and Goya Body Mist and Lotion. In contrast, Personal Wash and Home Care segments experienced moderate volume declines.

In line with the evolving consumer needs, the Group expanded its Personal Care portfolio with the launch of Gold Hair Wax, further strengthening its presence in the male grooming segment.

Clogard received notable recognition during the quarter, being featured in the Sri Lanka and Maldives Edition of Essentials in Modern Marketing by Kotler Impact Inc. This accolade underscores the brand’s strong consumer relevance, local market insight, and consistent track record of innovation – positioning Clogard as a benchmark for marketing excellence in the region.

Demonstrating its commitment to long-term capability building, Hemas Consumer Brands entered into a strategic partnership with the Institute of Supply and Materials Management (ISMM) aimed at advancing innovation, professional development, and sustainable growth within Sri Lanka’s supply chain ecosystem. The collaboration is designed to bridge the gap between industry and academia, equipping future professionals with the skills and exposure needed to lead with purpose and impact.

Consumer Brands International

Bangladesh’s macroeconomic environment continued to improve, with headline inflation easing to 8.5% in June 2025. Currency stability was supported by strong export performance and a notable increase in remittance inflows, which contributed to the strengthening of foreign exchange reserves. However, the external sector may encounter renewed pressure following the introduction of a 20% reciprocal tariff on all Bangladeshi exports to the United States, effective 7th August 2025—posing potential risks to future export growth.

The business maintained its positive momentum during the quarter, with earnings growth driven by both increased revenues and margin expansion. Performance benefitted from a favourable sales mix, reflecting a strategic shift toward higher-margin product categories. Margin improvements were further supported by reduced input costs, enabled by proactive and disciplined procurement efforts.

Learning

Atlas sustained its market leadership across key categories, with most segments recording year on year revenue growth during the quarter. To reinforce its position and boost stationery sales, the business launched an innovative island-wide promotion campaign during the period.

The Atlas PlayPlaz range of educational aids and toys, initially launched in the Western Province last year, has now been made available island wide. To date over 3,600 preschool teachers have been trained on the effective use of these products, raising awareness and empowering educators to serve as brand ambassadors.

Healthcare

The Healthcare sector delivered strong revenue growth of 20.2 % during the first quarter, reflecting the strength and resilience of its diversified portfolio. All segments—hospitals, pharmaceutical distribution and manufacturing contributed positively to this performance. This growth momentum was supported by continued investments aimed at enhancing service quality and expanding product offerings. The Sector reported quarterly revenue of Rs. 19.4 billion, with operating profit of Rs. 1.7 billion, and earnings of Rs. 1.1 billion, representing a 29.4% and 26.8% year-on-year increase respectively.

Pharmaceuticals

Both Pharmaceutical Distribution and Manufacturing segments recorded significant improvements in profitability during the period, underpinned by robust topline growth, margin expansion, and disciplined operational execution.

During the quarter, Hemas Pharmaceuticals (Pvt) Ltd (HPPL), the leading pharmaceutical distributor in Sri Lanka, further reinforced its commitment to expanding access to quality, world class healthcare solutions by introducing several new therapies in the lipid and blood pressure regulatory segments.

With the objective of unlocking greater group synergies and sharpening Morison’s focus on core manufacturing, Morison transitioned its distributed pharmaceutical agency operations to HPPL. The move leverages HPPL’s specialised commercial capabilities, allowing Morison to focus on scaling its manufacturing operations while enhancing integration and value creation across the Hemas Healthcare sector. Furthermore, the third batch of the Certificate Training Course in Diabetes Care, conducted in partnership with the Sri Lanka College of Endocrinologists (SLCE) with the objective of upgrading skills in the management of diabetes among primary healthcare physicians, was successfully launched during the quarter. The Sri Lanka Pharma Manufacturers’ Association (SLPMA), in which Morison is an active member, recently presented a strategic blueprint to the Government, outlining a comprehensive set of actionable recommendations, with the objective of positioning pharmaceutical manufacturing as a key thrust industry in Sri Lanka.

The Government has recently issued a Gazette (No. 2446/34), introducing price regulation including establishing maximum retail prices for medicines. The implementation of this mechanism is expected to impact the selling prices of pharmaceuticals, which are currently market determined.

Hospitals

Redefining Sri Lanka’s private healthcare landscape, Hemas Health Plus, a purpose-built facility which merges advanced clinical services with comfort, convenience in a lifestyle-integrated approach was opened in Wattala. Anchored by a tertiary hospital framework, the facility features specialised centers including the country’s first private-sector paediatric liver unit, a premium cosmetic care center, and child-friendly paediatrics and wellness hubs. It offers seamless access to diagnostics, emergency care, and specialist consultations under one roof.

In a significant advancement in non-invasive diagnostics, Hemas Hospitals Wattala introduced Sri Lanka’s first Echosens FibroScan Expert 630 system, a globally recognised standard for liver health assessment. This state-of-the-art technology enables early detection, diagnosis, and monitoring of liver diseases and marks an important step toward establishing a comprehensive liver care centre. The initiative strengthens the hospital’s clinical capabilities and broadens access to specialised, high-quality liver care in the country.

Mobility

The Maritime segment revenue grew during the quarter, primarily supported by increased cargo volumes, while average freight rates remained stable. The segment continues to monitor global macroeconomic and geopolitical developments closely, including changes in tariff policies, disruption along the Red Sea route and broader supply chain realignments that may impact freight rates and cargo flows.

In the Aviation segment, revenue from cargo operations increased, driven by higher volumes and improved average freight rates. However, passenger volumes declined due to heightened competition within the industry. As part of ongoing efforts to enhance its service offering, Emirates will introduce its retrofitted four-class Boeing 777 on the Dubai Colombo route. This addition will mark the second daily Emirates flight to Sri Lanka featuring Premium Economy seats, offering an elevated travel experience.

The Mobility sector posted revenue growth of 4.0% year-on-year, reaching Rs. 494.9 million, primarily due to improved performance in cargo operations. Operating profit and earnings posted Rs. 298.2 million and Rs. 148.3 million respectively.

Leading with ESG

In alignment with its long-term sustainability roadmap, the Group continued to drive progress across its environmental priorities, reinforcing its commitment to operational sustainability and responsible resource stewardship. Strategic interventions in plastic waste management resulted in the collection of 281,534 kg of plastic, with 1.8 million kg of plastic collected to date as a part of Group’s effort to collect back 100% of its plastic sent to the market.

Targeted efficiency upgrades and process improvements led to a 1.8% reduction in Group water intensity, reflecting ongoing efforts to optimise resource consumption across operations. The Group continued to advance its transition to renewable energy, with 9.0% of total electricity consumption now derived from clean energy sources, primarily through solar installations at key operational sites.

During the quarter, the Group continued to empower communities through initiatives focused on education, health, and economic inclusion. Over 19,000 children and teachers benefited from digital learning and teacher training programs, while early childhood education was expanded with two new preschools. Health and wellbeing programs reached over 4,700 individuals through preventive care and awareness initiatives. In support of vulnerable communities, more than 2,000 people were engaged through livelihood support and wellbeing programs, donations for patients, and nutrition interventions for over 1,200 preschoolers across 12 districts.

Outlook

Deflationary pressures are expected to ease, supported by the 15% electricity tariff increase implemented in June and a gradual rise in global commodity prices. Moreover, in a significant development for Sri Lanka’s exports, United States has further reduced tariffs on Sri Lankan exports to 20%, down from the initially announced rate of 44% in April. The new tariff structure will come into effect from 7th of August and while it still presents a material risk to export competitiveness, the significant tariff reduction is expected to provide a measure of relief to Sri Lankan exporters.

I would like to take this opportunity to sincerely thank Mr. Ravi Jayasekera for his leadership during the transition period, which enabled the Group to maintain stability and performance.

As I take on this responsibility, I am encouraged by the signs of macroeconomic stabilisation and remain confident that our strategic direction will drive sustainable growth for the Group in the year ahead. We are currently evaluating overseas expansion opportunities and the extension of the Thalawathugoda hospital—ventures that are aligned with our long-term growth priorities and designed to unlock scale and value across the portfolio. Further, there will also be continued focus on enhancing internal efficiencies through initiatives which were rolled out last year, such as optimising the Group’s operating structure, upgrading the IT infrastructure and driving digital transformation across the Group.

I look forward to working closely with our teams and partners as we navigate this next phase—focused, grounded, and committed to creating long-term value for all our stakeholders. 

Ashish Chandra

Group Chief Executive Officer

August 06, 2025

Colombo