ECONOMYNEXT – Sri Lanka’s Hayleys group slipped into a loss of Rs150 million in the June 2017 quarter with its gloves and purification businesses hit by higher raw material costs and agriculture by bad weather.
Sales of the group, which made a profit of Rs356 million in the June quarter of the previous year, rose 21% to Rs29 billion, according to interim accounts filed with the stock exchange.
Hayleys reported a loss per share of Rs2 in the June quarter. The Hayleys share last traded at Rs294.
“We remain confident that group profits will rebound over the coming quarters as multiple strategic investments made over the recent past generate returns and contribute positively towards profitability,” Hayleys Chairman and Chief Executive Mohan Pandithage said in a statement.
Profit has also been impacted by an increase in net finance cost, which rose by 37% to Rs. 875.6 million in 1Q18 from the previous year.
This was mainly due to the increase in market rates and the higher level of investment from the group into key business segments with a view to enhancing growth potential over the medium to long term, the statement said.
The accounts showed a sharp fall in profits from gloves manufacturing along with a dip in earnings at its purification business.
The group’s textiles business profits were also down along with that from construction materials and agriculture.
However, the group’s transportation and logistics sector, its biggest business, reported a sharp increase in profits while plantations returned to profit from a loss the year before on the back of stronger tea prices at the Colombo tea auction.
Hayleys hotels business made a loss. Although the leisure sector was able to maintain relatively stable revenues, its ability to generate profits was hampered due to the substantial refurbishments being carried out at Kudarah Island Resort in Maldives, a statement said.
“The segment completed the quarter with an operating loss of Rs. 106.9 million. However, with refurbishments having since been completed just prior to the end of 1Q18, the group anticipates significant improvements in profitability moving forward.”
Hayleys group power and energy business profits were up slightly.
“Following the completion of one of Sri Lanka’s largest solar power plants in Welikande, the group’s power and energy sector recorded notable improvements in top and bottom line performance, generating Rs. 404.9 million in revenue, while operating profits within the segment rose to Rs. 229.5 million,” the statement said.
(COLOMBO, August 09, 2017)