Sri Lanka aluminium firm expects 40-pct market drop on Covid hit
ECONOMYNEXT – Sri Lanka’s market for aluminium extrusions is expected to drop 40 percent due to the hit on the property sector from Coronavirus, a building materials company has said.
“We expect the market size for aluminium extrusions by approximately 40 percent and remain so until a permanent solution for Coronavirus is found,” Lanka Aluminium Industries Plc, said in a stock exchange filing.
“We are expecting this drastic reduction in demand after discussions with our customers, especially house and apartment builders who will the demand for housing products to reduce with the downturn in the economy.”
Lanka Aluminium said it closed its factory after curfews were imposed on March 19, and there were hardly any sales in April and May.
Production had started on May 11, 2020, with restricted staff.
Dealers around the country had also re-opened but had reported lower demand and sales.
In March 2020 quarter, the firm had posted revenues of 397 million rupees, down from 463 million rupees a year earlier.
The shutdown of the construction industry is expected to hit the June quarter, which will also reduce profits in the year.
Customers have delayed payments, hurting cash flows, the firm said.
Lanka Aluminium was focusing on lowering fixed costs and talking with banks to re-structure short term loans which fell due on March and April.
“We, unfortunately are not eligible for any of the concessions offered by the government, since we are not coming under the SME sector,” the firm said.
In April the firm had negotiated to reduce some overhead expenses. The directors and management had agreed to a salary cut. The workforce had also agreed to a cut which “kept to a bare minimum” the firm said.
The firm said it was keeping in touch with customers and was also looking for overseas customers. (Colombo/June01/2020)