Rising costs, slow sales hinder Sri Lanka Haycarb profit growth
ECONOMYNEXT – Sri Lanka’s Haycarb said net profit rose 10 percent to 170 million rupees in the December 2015 quarter from a year ago as energy saving measures helped maintain profitability despite rising costs and slow sales.
Sales of the multinational coconut shell activated carbon manufacturer grew 2.5 percent to 2.9 billion rupees, unaudited results filed with the stock exchange showed.
Basic earnings per share for the December quarter were 5.74 rupees.
EPS for the nine months ending 31 December 2015 rose to 14.41 rupees with net profit up three percent to 428 million rupees from the year before while sales grew five percent to 8.8 billion rupees.
"The company operated under adverse market conditions in its export markets," Haycarb Managing Director Rajitha Kariyawasan said in a statement.
This was because of the economic downturn and currency devaluation and volatility in its major markets in Europe, Russia, China and Australia and continued depressed conditions in the gold industry.
"In addition the high cost of charcoal imports to Sri Lanka and the increase in charcoal prices in Indonesia and Thailand impacted the profit margins," Kariyawasan said.
"Given the challenges in the external environment, focus on lean manufacturing practices and the savings that continue to accrue from energy saving initiatives launched previously helped to maintain profitability."
Haycarb’s environmental engineering arm, Puritas (Pvt.) Ltd., extended business in to the small and medium scale water and waste-water purification systems in Sri Lanka and in the region.
This resulted in a "significant increase" in revenue and profitability in the quarter, Kariyawasan said.
In an effort to strengthen raw material supply networks Haycarb introduced an environmental friendly charcoaling facility in Thailand during the third quarter.
The company will continue to build partnerships through providing technology and funding for environment friendly charcoaling in all its manufacturing locations, Kariyawasan said.
New product development and marketing initiatives together with significant growth in Puritas is expected to boost sales and profits in the short to the medium term, he said. (Colombo/Feb3/2016)