Piramal Glass Sri Lanka unit June net down 55-pct
ECONOMYNEXT – Piramal Glass Ceylon said net profit fell 55% to Rs47 million in the June 2018 quarter from a year ago as despite exports almost doubling domestic sales shrank for the second straight year and costs rose.
Overall sales of Sri Lanka’s sole container glass maker, a unit of India’s Piramal Group, rose 17.5% to Rs1.6 billion during the period, according to interim results filed with the stock exchange.
Earnings per share were five cents in the June quarter. The stock closed Monday at Rs4.30, down 10 cents or 2.27%.
A statement said domestic sales fell 8% to Rs1,016 million from the same quarter in 2017, the second straight year in which sales fell.
“The major impact came through the liquor segment. Over the past two years a shift of consumption was observed from the high end locally filled foreign liquor segment to the low end liquor. This was further aggravated with heavy taxes imposed on the liquor industry,” it said.
“The high end liquor segment uses new bottles whilst the low end uses used, scrapped bottles. Thus this shift has impacted the demand of fresh bottles.”
The company said it has entered into the retail segment with the launch of glass bottles for food and water for house hold consumption, opening a new category of business and providing alternatives to plastics and PET.
Export sales for the quarter grew by 98% to Rs633 million from a year ago.
“This is 39% of the overall sales value as against 23% in the previous year first quarter,” the statement said.
“The company did its best to fill the excess capacity created with the decline in the domestic market through exports. Most of the orders obtained at short notice from the mass market as capacity fillers did not yield the same attractive margins as the domestic and high niche segment of the exports.”
The company said it continuously strives towards gradually shifting the volumes from the mass market to the premium segment.
Presently company is exporting to USA, Canada, New Zealand, Australia, India, Pakistan, Myanmar and several other markets. A significant growth has been experienced in the USA and Canadian markets.
Piramal Glass Ceylon said gross profit for the period fell to Rs286 million from Rs351 million the corresponding period the previous year.
“Whilst product mix being one of the reasons for low margins, the other factors were the energy costs and other input cost increases,” the statement said.
“The LPG rate was an all-time high for the past three years. Diesel rate increased by Rs. 24/= per litre impacting cost of production in several fronts including increases in raw material prices, packing material cost and transportation costs.”
(COLOMBO, 13 August, 2018)