Sri Lankan conglomerate Hemas Holdings posted marginal revenue growth of 0.9% year-on-year in the first quarter of fiscal 2027, but faced significant headwinds from geopolitical tensions, currency depreciation, and inflation that eroded profitability across most business segments.
Hemas Holdings recorded revenue of Rs. 28.77 billion in the three months ending June 2026, representing modest growth of 0.9% compared to the same period last year. However, the company's bottom line deteriorated significantly, with earnings attributable to equity holders declining 21.4% to Rs. 937 million and EBITDA falling 14.1% to Rs. 2.26 billion. The divergence between flat topline performance and sharply lower profitability reflects the company's struggle to pass on rapidly escalating costs to consumers and regulatory constraints.
The quarter was dominated by external macroeconomic shocks stemming from Middle East geopolitical tensions and Sri Lanka's currency crisis. Domestic fuel and diesel prices surged more than 40% year-on-year, while the Sri Lankan rupee depreciated an average of 8% annually and 5% quarterly. These pressures translated into significantly higher costs for freight, logistics, and raw materials. Net operating costs increased 9% year-on-year, with selling and distribution expenses rising 12.3% and accounting for over half of the total operating cost increase. The company maintained gross profit margins at 30.4%, up marginally by 0.2 percentage points, through selective price increases and favourable sales mix adjustments.
Performance varied considerably across business segments. Consumer Brands, Hospitals, and Mobility divisions recorded growth, while Life Sciences contracted 3.8% due to regulated pharmaceutical pricing that could not immediately reflect currency depreciation and import cost increases. The Mobility division benefited from a 28.5% year-on-year surge in cargo throughput, partly driven by the Middle East crisis redirecting traffic to Sri Lankan ports. However, the Hospitals segment experienced margin pressures from a shift in patient mix toward higher communicable disease cases, despite an 11% revenue increase.
Management identified margin recovery as the immediate priority, emphasizing calibrated pricing strategies to protect volumes, acceleration of productivity initiatives, and cost containment measures. The company also restructured its financial reporting to separately track Hospitals and Life Sciences divisions, acknowledging their distinct business models and capital requirements. With a diversified portfolio and net cash position, Hemas indicated it has adequate resilience to navigate the volatile operating environment while pursuing long-term growth objectives.
