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Spending Power

Nov 02, 2007 (LBO) – Sri Lankan conglomerate Hemas Holdings has reported a sharp fall in net profit for the September quarter as high inflation erodes consumer spending and high interest rates make borrowing for investments more costly. Group net profits fell 44 percent to 166 million in the second quarter ending September 2007, according to interim results announced by the company.

Turnover rose 12 percent year-on-year to 3.57 billion rupees for the quarter.

First half net profit was down 21 percent to 403 million.

Hemas chief executive Husein Esufally said profits were down in all business sectors consumer goods, healthcare, leisure, transportation and power.

"This quarter was a challenging one for your company which had to face the adverse effects of reduced consumer spending and depressed margins, whilst investing for future growth," he said in a statement to shareholders.

"Higher input costs, increased costs of distribution and sustained high interest rate scenario, impacted operating margins for the quarter which declined to nine percent from 14 percent during the same period last year."

Stock market analysts said they were concerned about the dip in revenue from consumer goods, long the mainsta

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