Stocks & Companies

Fitch affirms Sri Lanka’s Hayleys ‘AAA’ rating

Friday February 13, 2026 10:51 am

ECONOMYNEXT – Fitch Ratings has affirmed Sri Lankan conglomerate Hayleys PLC’s National Long-Term Rating of ‘AAA(lka)’ based on its diversification and exports.

Hayleys’ outstanding senior unsecured debentures were also affirmed at ‘AAA(lka)’.

“Hayleys’ rating reflects its large operating scale and diversification across end-markets and business segments. Its significant export earnings drive sustainable operating cash flow and counterbalance temporary challenges in some business segments,” the ratings agency said.

The full statement is reproduced below:

Fitch Affirms Hayleys at ‘AAA(lka); Outlook Stable

Fitch Ratings – Colombo/Singapore: Fitch Ratings has affirmed Sri Lankan conglomerate Hayleys PLC’s National Long-Term Rating of ‘AAA(lka)’. The Outlook is Stable. The agency has also affirmed the ratings on Hayleys’ outstanding senior unsecured debentures at ‘AAA(lka)’.

Hayleys’ rating reflects its large operating scale and diversification across end-markets and business segments. Its significant export earnings drive sustainable operating cash flow and counterbalance temporary challenges in some business segments. We forecast the company’s financial profile to remain commensurate with its rating.

We rate Hayleys’ outstanding unsecured debentures in line with its issuer rating, as we believe subordination risk from debt at subsidiaries is limited. This is the case so long as the ratio of debt at subsidiaries to consolidated EBITDA remains no higher than 2.5x, the level at the end of the first half of the financial year ending March 2026 (FY26).

Key Rating Drivers

Geographic and Business Diversification: Eight businesses generate over 80% of Hayleys’ group EBIT, while direct and indirect exports accounted for 53% of revenue in FY25. Around 15% of revenue stems from Europe and the US, indicating low exposure to slower-growth developed markets.

Hayleys’ manufacturing locations are also diversified beyond Sri Lanka. Only 55% of its Purification segment capacity is local, with the rest located in Thailand and Indonesia. The Hand Protection segment, which produces rubber gloves, also operates in Thailand, the world’s largest source of natural rubber.

Rising Operating Cash Flow Growth: We expect revenue to rise by 19% in FY26, driven by the Consumer & Retail, Hand Protection, Purification and Transportation & Logistics segments. Consumer & Retail is benefiting from recovering demand in Sri Lanka, while Hand Protection and Purification should gain from capacity expansion and new product lines. We also expect the Transportation & Logistics segment to benefit from rising transshipment volume in Asia. This growth should counterbalance weaker performance in Textiles on softening demand in key export markets.

We expect the EBITDA margin to moderate to around 10% in FY26, from 11% in FY25, driven by the Textiles segment, which is facing softening volumes due to increased US tariffs, leading to pricing pressure, while the Construction segment is facing high operating leverage due to underutilised capacity. The EBITDA margin should recover to around 11% in FY27, once the full impact of price adjustments and improving capacity utilisation in these segments is realised. We also expect full-year cash flow from capacity expansion in the Hand Protection and Purification segments to materialise during FY27.

Steady Leverage: We expect EBITDAR net leverage to stay at around 3.0x-3.5x in FY26-FY28, excluding step-down subsidiary, Singer Finance (Lanka) PLC (SFP, BBB+(lka)/Stable). We exclude SFP’s net debt and EBITDAR to assess Hayleys’ credit profile, as the step-down subsidiary does not materially fund Hayleys’ product sales or share a common brand. We expect Hayleys to spend around LKR20 billion in annual capex on capacity expansion across its business segments, which should boost revenue growth, but will keep free cash flow (FCF) negative.

Strong Market Presence: Hayleys is a leading player in Sri Lanka’s logistics, consumer-durable retail and tea export industries. It also has a prominent share of the fragmented global hand protection and coconut shell-based activated carbon purification markets. Strong customer relationships underpin its position. Some units face significant customer concentration, but the risk is mitigated by high switching costs and established ties. Hayleys’ competitive position is strengthened by its vertical integration, enabling it to capture more profits along the value chain, and strong relationships with suppliers.

Adequate Holding-Company Financial Profile: Hayleys strong ownership and control of its operating subsidiaries allows it to extract subsidiaries’ operating cash flow to service its obligations. We expect holding-company interest coverage – calculated as cash flow from operations net of interest paid/interest paid – to remain comfortably above 1.0x over the medium-term. This supports our view of limited cash flow subordination of the holding company.

Peer Analysis

We rate Hayleys at the same level as domestic beer manufacturer, Lion Brewery (Ceylon) PLC (AAA(lka)/Stable), which benefits from more defensive cash flow. Lion is the clear market leader in Sri Lanka’s beer industry and is protected by high entry barriers stemming from licensing requirements, a ban on advertising, strong brand presence and an extensive retail and distribution network. Hayleys is more diversified, while Lion is exposed to a single product category, but Lion has a stronger financial profile given modest requirements for investing in product expansion.

We also rate domestic conglomerate, Melstacorp PLC (AAA(lka)/Stable), at the same level as Hayleys. Melstacorp benefits from more defensive cash flow and a stronger FCF profile, due to its market leadership in the protected domestic spirits market. In contrast, Hayleys is exposed to more cyclical end-markets in some of its business segments, which are also more fragmented. However, Hayleys’ greater geographical and end-market diversity mitigates some of these risks, whereas Melstacorp’s operations are largely concentrated in Sri Lanka.

We rate Hemas Holdings PLC (AAA(lka)/Stable) at the same level as Hayleys. Hemas’s rating is driven by its defensive businesses, including imports, manufacturing and the retail of pharmaceuticals, personal and homecare consumer products. It also has significantly stronger FCF, a record of measured expansion and strong liquidity. These strengths offset its smaller scale and limited geographical diversification compared with Hayleys.

Sunshine Holdings PLC (AA+(lka)/Stable) is rated one notch below Hayleys to reflect its significantly smaller operating scale, limited geographical diversification and regulatory risks in some of its businesses, which are mitigated by its better financial profile with lower leverage. Sunshine has been more conservative with its expansion than Hayleys, growing only within its core businesses without significantly pressuring its balance sheet. In contrast, Hayleys has a history of debt-funded growth, resulting in higher leverage than at Sunshine.

Hayleys’ credit considerations lead to a higher rating than for large domestic banks, non-bank financial institutions and insurance companies, which are more exposed to sovereign stress due to holdings of large sovereign-issued securities for regulatory reasons. The large financial institutions also have broader exposure to the various economic sectors.

Fitch’s Key Rating-Case Assumptions

Revenue growth of 19% in FY26 and 6% in FY27, supported by growth in the Consumer & Retail, Hand Protection, Purification and Transportation & Logistics segments.

EBITDA margin of around 10% in FY26 (down by 83bp yoy), due to pressure on margins in the Textiles and Construction segments. Margin to recover to 11% in FY27, supported by a recovery in these segments and capacity expansion in others.

Capex averaging at around LKR20 billion over FY26-FY29, similar to levels seen in the last few years.

Dividend payout of around LKR4.5 billion in FY26, with 10% annual growth in dividend per share from FY27-FY29.

Conclusion of Hayleys’ rights issue of LKR9 billion in FY26, with proceeds used to finance new investments and repay debt.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

Group EBITDAR net leverage (excluding SFP) increasing to above 4.0x for a sustained period.

Group EBITDAR fixed-charge coverage falling below 2.0x for a sustained period (FY25: 3.1x).

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

There is no scope for an upgrade, as the company is already at the highest rating on the Sri Lankan National Rating scale.

Liquidity and Debt Structure

Hayleys had around LKR45 billion in unrestricted cash at end-September 2025 against around LKR160 billion in debt maturing in the next 12 months. This includes short-term debt, but excludes customer deposits and debt at SFP of around LKR40 billion. About LKR115 billion of debt consists of short-term working-capital lines, which we expect banks to roll over, as they are backed by around LKR165 billion in estimated net working capital on the balance sheet and the company’s healthy cash conversion cycle of around 130 days.

Hayleys has demonstrated strong access to domestic banks as one of Sri Lanka’s largest listed domestic corporates, which further supports its liquidity profile.

Issuer Profile

Hayleys is a large listed domestic conglomerate with prominent market positions in diversified business sectors, including transportation, consumer and retail, textiles, rubber gloves and plantations. It derives around half of its revenue from outside Sri Lanka.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.

MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch’s latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch’s macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.

Markets

Sri Lanka stocks close down 0.60-pct, dragged by HNB and LOLC

Friday November 13, 2026 3:28 pm

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed down on Friday, CSE data showed, with the benchmark All Share Price Index moving down 0.60 percent.

The ASPI was down 133.22 points at 22,024.18, while the more liquid S&P SL20 was down 1.06 percent, or 67.55 points, at 6,298.02.

The ASPI ended the week up 784.53 points from last Friday.

Positive contributors to the ASPI were Dialog Axiata (up 0.40 percent at 50.20 rupees), Distilleries Company of Sri Lanka (up 0.52 percent at 58.30 rupees), Aitken Spence (up 3.60 percent at 151.00 rupees), Ceylon Tobacco Company (up 1.05 percent at 1,828.50 rupees), and LOLC Finance (up 1.96 percent at 5.20 rupees).

Hatton National Bank (down 1.88 percent at 403.75 rupees), Richard Pieris and Company (down 6.21 percent at 27.20 rupees), LOLC Holdings (down 2.17 percent at 405.00 rupees), Sampath Bank (down 1.91 percent at 154.00 rupees), and Singer (Sri Lanka) (down 2.40 percent at 77.30 rupees) were top negative contributors.

Market turnover was 3.23 billion rupees. Capital goods led turnover with 869.21 million rupees. (Colombo/Nov13/2026)

Economy

Sri Lanka MP slams budget speech for omitting Tamil national question

Friday November 13, 2026 2:56 pm

ECONOMYNEXT – A Sri Lanka legislator has voiced strong disappointment that the President’s budget speech failed to make a single mention of the Tamil national question.

“It is very unfortunate that in His Excellency the President’s speech, there has not been a single word mentioned about the Tamil national question. Not a single word,” Shanakiyan Rasamanickam said.

“A budget speech generally, is a policy direction of the government for the next year. The budget speech is not only a statement of the country’s fiscal position or the economy’s position. It is the country’s, the government’s, plan, or what the government plans to do the following year. That’s a policy statement.”

Former presidents would at least mention the Tamil question even if it was not resolved, he said.

Former President Ranil Wickremesinghe in his speech, in his policy statement, he would mention: “The Tamil national question must be resolved,” Rasamanickam said.

Former Presidents Maithripala Sirisena and Gotabaya Rajapaksa also mentioned that the national ethnic question must be resolved, he added.

“Every President, every country’s Head of State, in their policy statements, have acknowledged the fact that there is an unresolved national issue, the Tamil national question, that it needs to be resolved. Various governments have proposed various mechanisms; none of them have succeeded, but at least it was mentioned.”

This year’s budget made allocations for the Office of Missing Persons, and the Office of Reparations.

“But the domestic mechanism is a mechanism that the victim community has rejected. So you all are allocating money to a mechanism where the victim community is not going to be part of.”

Last year’s budget 1 billion was allocated to be spent on the Trincomalee and Jaffna airports.

“Where was that 1 billion for the Trincomalee and Jaffna airports spent last year?”

“The trajectory of this government, Honourable Deputy Speaker, is worrying to me. It’s really worrying to me. Because if the objective is to say that there is no Tamil national question, if the objective is to say that you all have resolved any ethnic issue that this country faced, then Honourable Deputy Speaker, then I think the Tamil people will teach this government a very, very, very harsh lesson in the future.” (Colombo/Nov13/2026)

Bonds & Forex

Sri Lanka sells extra Rs6.5bn Treasury bills after auction

Friday November 13, 2026 12:32 pm

ECONOMYNEXT – Sri Lanka has sold 6,500 million rupees of treasury bills offered on tap at an average rate of 9.95 percent, the public debt management office said, bringing the total of bills sold in the week to 85.562 billion rupees.

The issue offered 90 billion.

Total market subscription was 6.5 billion rupees.

The debt office sold a 12-month bill at 9.95 percent.

On Wednesday (11) the debt office raised 79 billion rupees of 3, 6 and 12 month bills after offering 90 billion.

The settlement date is November 13. (Colombo/Nov13/2026)

Construction and Real Estate

Access Engineering Sept quarter group net profit surges 200-pct to Rs4.75bn

Friday November 13, 2026 12:15 pm

ECONOMYNEXT — Sri Lanka’s Access Engineering PLC recorded a group net profit attributable to equity holders of Rs. 4.75 billion for the quarter ended September 30, surging 200 percent from Rs. 1.58 billion a year earlier, interim accounts showed.

Basic earnings per share rose to Rs. 4.08 for the September quarter, up from Rs. 1.58 previously.

Quarterly group revenue expanded 36 percent to Rs. 20.39 billion from Rs. 14.94 billion, underpinned by condominium property handovers — reflected in inventories dropping Rs. 7.69 billion since March to Rs. 35.71 billion — alongside strong automobile sales and steady civil engineering execution.

Cost of sales rose at a slower 27 percent to Rs. 14.34 billion, lifting gross profit by 64 percent to Rs. 6.05 billion and expanding gross margins to 29.7 percent from 24.7 percent.

Other income jumped 144 percent to Rs. 259.9 million, while administrative expenses rose 75 percent to Rs. 1.14 billion, leaving operating profit up 64 percent at Rs. 5.16 billion.

However, finance costs more than doubled, rising 107 percent to Rs. 1.18 billion on elevated group borrowings of Rs. 43.74 billion, partly offset by finance income climbing 302 percent to Rs. 42.2 million.

Share of results from equity-accounted investees rose 122 percent to Rs. 26.7 million, pushing pre-tax profit up 56 percent to Rs. 4.05 billion.

Income tax swung to a net reversal of Rs. 186.6 million from an expense of Rs. 804.1 million, boosted by deferred tax assets on unrelieved losses from a 100 percent enhanced capital allowance claimed by 60 percent-owned radiopharmaceutical subsidiary Access Medical Tracers (Private) Limited.

Total period profit rose 136 percent to Rs. 4.24 billion, with non-controlling interest declining 24 percent to Rs. 164.9 million following last year’s buyout of minority shareholders in Harbour Village (Private) Limited.

No separate exchange gain or loss was itemized in quarterly earnings, though foreign currency translation via associates recorded a Rs. 17.4 million loss in other comprehensive income, alongside USD 16.6 million in corporate guarantees.

Notes also flagged an expected Rs. 1.45 billion recovery from the terminated South Asia Commercial and Logistics Hub project, a Rs. 225 million post-quarter legal settlement already provided for, and a Supreme Court appeal over a 2011/12 PAYE tax ruling.

Group assets stood at Rs. 132.4 billion as of September 30, with net asset value per share at Rs. 46.70, as the Employees’ Provident Fund raised its stake to 5.69 percent.

Access Engineering shares closed at 80.00 rupees at the end of September and are currently trading around 85.80 rupees. (Colombo/Nov13/2026)

Economy

Sri Lanka private sector says timely implementation of Budget 2027 key

Friday November 13, 2026 11:43 am

ECONOMYNEXT – Private sector body, The Ceylon Chamber of Commerce, said it was encouraged by the broad direction of Budget 2027, noting that it reinforces Sri Lanka’s commitment to economic transformation while maintaining policy continuity, macroeconomic stability, and fiscal discipline.

“This continuity is particularly important as the country seeks to transition from economic stabilisation to a more durable, investment-led growth trajectory.”

The chamber also noted several areas where the Budget could have placed greater emphasis to strengthen the country’s growth prospects.

“In particular, there is a need for a stronger focus on attracting Foreign Direct Investment (FDI), accelerating factor market reforms, particularly in land and labour, and fast-tracking public procurement reforms to improve the efficiency and speed of project implementation.

“More targeted and actionable proposals could have been introduced to unlock the potential of sectors with significant growth opportunities, including tourism, agriculture, IT/BPO and logistics.”

The chamber said the budget contains positive measures aimed at enhancing competitiveness, and external sector resilience, while presenting opportunities for focus on sectors that can accelerate growth.

“A number of the key structural reforms identified in last year’s Budget have been carried forward and strengthened, providing greater certainty and predictability to businesses and investors.

“These include the continued implementation of the Trade National Single Window (TNSW), the phased removal of para-tariffs, the rollout of the Digital ID framework, efforts to expand market access through new Free Trade Agreements (FTAs), the strengthening of one-stop-shop investment facilitation mechanisms, progress on Customs reforms, the expansion of Bandaranaike International Airport (BIA), enhanced financing support for SMEs, and reforms relating to the management of State-Owned Enterprises.”

The CCC said that more than 20 proposals submitted by it have been reflected in Budget 2027.

These include measures to strengthen investor facilitation through the establishment of a professionally managed investment promotion agency; continued efforts to improve trade facilitation and export competitiveness; the Government’s consideration of a successor programme with the International Monetary Fund (IMF); accelerated progress on key legislative reforms; the expansion of digital government services; and the promotion of cashless payments and broader digital adoption. The Budget has also captured several priorities relating to energy security, including the accelerated deployment of Battery Energy Storage Systems (BESS) and investments in fuel storage infrastructure, initiatives to optimize underutilized agricultural land, measures to support the expansion of the digital economy and the IT/BPO sector, and tax reforms to support exporters, including the acceptance of newly VAT-registered exporters as eligible exporters.

“The inclusion of these priorities reflects the value of sustained public-private dialogue and demonstrates increasing alignment between national policy objectives and the needs of a competitive, export-oriented economy.

“The priority now must be effective and timely implementation to translate policy commitments into investment, competitiveness, exports and sustainable growth.” (Colombo/Nov13/2026)