High coconut shell prices, shortfalls prune profits at Sri Lanka’s Haycarb
ECONOMYNEXT – Activated carbon maker Haycarb Plc said net profit fell 22.8% to 162 million in the December 2017 quarter from a year ago owing to shortages of its raw material, coconut shells, and resulting high prices, despite raising product pricing.
Sales rose 8.9% to Rs3.8 billion during the period, interim accounts filed with the Colombo Stock Exchange showed.
Quarterly earnings per share were Rs5.44. Haycarb’s stock closed at Rs140 Monday.
In the nine months to 31 December 2017, EPS was Rs13.44 with net profit down 21% to Rs399 million while sales were up 16% o Rs10.9 billion from the year before.
Haycarb PLC Managing Director Rajitha Kariyawasan said that the raw material shortages and resulting high prices continued to impact the bottom line adversely in Q3 of 2017/18.
“The deterioration of charcoal availability in Sri Lanka, India and Thailand driven by unfavourable weather conditions, resulted in significant increases of cost of manufacture in Sri Lanka and Thailand,” a statement said.
“On the other hand, even though the raw material availability continued to recover in Indonesia during the period under review, the price pressure did not ease due to the high level of demand attributable to shortages of charcoal in other locations.”
In this situation the company said it has made significant efforts to revise prices of activated carbon in consecutive occasions through discussions with its valued customers.
“However, the lagging effect and the inability to pass the full impact of the price increase has resulted in lower margins compared to last year.”
Kariyawasan said that in this challenging environment, noteworthy savings were generated through increased efficiencies and cost reductions obtained via manufacturing processes and supply chain through lean projects.
“The company’s initiatives to acquire new customer accounts and market segments backed by a robust product development platform have also shown positive results and added to the bottom line.
“Haycarb will continue to engage in its development initiatives to capture new markets, while using every effort to provide the best value proposition to its existing markets world-wide.”
Haycarb PLC made significant progress in its accreditations in quality by obtaining GMP, HACCP and ISO 22000 certifications from SGS that will enable the group to position its high value added products in the food, cosmetic and pharmaceutical application segments, Kariyawasan said.
He also noted the positive contribution to the bottom line from the environmental engineering arm, Puritas (Pvt.) Ltd. in Q3.
This business segment is expected to continue its growth momentum and make a significant impact to the bottom line in the last quarter, he said.
Puritas Sathdiyawara, the key CSR initiative of the Hayleys and Haycarb groups, was named world’s best environmental water project at Energy Globe World Awards 2017.
It provides 160,000 litres of clean drinking water daily to 33,000 people in 19 villages in North Central and Nothern districts affected by the Chronic Kidney Disease (CKD).
Kariyawasan said the company remains confident of achieving medium to long term growth with increasing emphasis on environmental sustainability worldwide through the execution of its strategic plan for growth and diversification.
(COLOMBO, February 13, 2018)