Hela Apparel Holdings PLC has reported a remarkable financial turnaround for the second quarter ending 30 September 2024, marking the return to operating profit for the first time in eight quarters. The company attributes this strong performance to the recovery in demand from key export markets and the successful outcomes of its ongoing restructuring efforts.
The company’s revenue surged by 36.5% year-on-year, reaching Rs. 23.4 billion for the quarter. This growth was driven by the newly established Brand Licensing Division, which benefited from the acquisition of UK-based Focus Brands in January 2024. Additionally, Hela’s private label manufacturing division saw robust sales, supported by the ongoing recovery in demand from its brand partners in the US and Europe.
Hela’s profitability showed substantial improvement, with gross profit climbing by 222.9% year-on-year to Rs. 4.5 billion. The manufacturing division achieved a gross profit margin of 16.6%, marking its highest level in 14 quarters. This was attributed to improved capacity utilization and a shift toward higher-margin apparel brands.
The company reported an operating profit of Rs. 557 million, reversing a trend of recurring operating losses. Both divisions contributed positively to the results, with the brand licensing division recording a profit-before-tax of Rs. 343 million.
Chairman A. R. Rasiah expressed satisfaction with the company’s progress, emphasizing the positive impact of strategic steps to reposition the company for future growth. Hela also recently completed a successful rights issue, raising approximately Rs. 1.6 billion, which forms part of a broader strategy to strengthen its balance sheet.
Group CEO Dilanka Jinadasa highlighted the company’s commitment to sustainable profitability, focusing on driving efficiencies and leveraging synergies between its manufacturing and brand licensing divisions. The recent exclusive partnership with Reebok to design, manufacture, and sell outerwear products across the UK and Europe is expected to play a key role in expanding Hela’s offerings within the global fashion value chain.
As Hela Apparel Holdings builds on its Q2 success, the company remains focused on ensuring continued profitability and growth in the upcoming quarters.