Piramal Glass Sri Lanka unit June net down, floods hit sales
ECONOMYNEXT – Piramal Glass Ceylon PLC said June 2017 quarter net profit fell 3.7% to Rs105 million from a year ago with sales slumping after floods triggered by heavy rains.
Total sales of the firm, a unit of India’s Piramal Glass, fell 17% to Rs1,403 million over the same period, according to interim results filed with the stock exchange.
Earnings per share were 11 cents.
“Amidst the adverse sales impact the company showed marked improvement in its profitability indicators,” a statement said.
The Gross Profit margin during the June 2017 quarter was 25% as compared to 18% in the same quarter a year ago with operating profit up to 15% from 9% the previous year.
“The incremental operational profit margin improvement was possible due to the reduction of trading sales,” the statement said.
Piramal Glass Ceylon’s relined furnace and expanded production line is now well stabilised and the domestic market is being supplied mainly with in house manufactured bottles which has replaced imported bottles, the company said.
Last year due to capacity constraints when the furnace was shut for renovation a considerable portion of the domestic sale was done through imports.
Even though the operating profit has increased the net profit after tax was subdued and pre-tax profit was affected due to the high interest cost resulting from the long term loan of Rs 3 billion borrowed for the funding of the project, the statement said.
“The operations during the quarter were impacted by the heavy floods which occurred during the latter part of May,” it said.
“Though the company premises itself was not affected access roads went under water hampering transportation of raw material and energy and the despatch of bottles.
“Several customers’ premises and operations were also affected due to the floods.”
Domestic sales stood at Rs. 1,084 million as against Rs. 1,346 million in the previous year, reflecting a fall of 19%.
“A dip in the overall domestic market was experienced which impacted the sales in all segments,” the company said.
Export sales for the quarter were at Rs. 319 million as against Rs. 338 million the previous year.
“The major decline in the export market was from export to India due to the changes in the tax structure with the announcement of GST implementation country wide,” the statement said.
“All other geographical locations namely Australia, USA and Canada have showed positive growth figures during the period under review.”
Piramal Glass Ceylon said it remained concerned the Ceylon Petroleum Corporation has not revised the rates of furnace oil for past four years although crude oil prices, which hit US$ 120 a barrel in 2011 had fallen below US$50, a more than 50% reduction in the price.
“Yet the corresponding furnace oil prices has not been addressed accordingly,” it said. “This state of affairs is affecting our competitiveness in the international market. The company has been requesting the government to introduce a formulae pricing based on international crude oil price which will be a fair transparent pricing mechanism.”
(COLOMBO, May 26, 2017)