Sri Lanka brushmakerâ€™s December profit down 53-pct
ECONOMYNEXT – BPPL Holdings Plc, a Sri Lanka-based brush maker, said net profit fell 53 percent to 54 million rupees in the December 2018 quarter from a year ago.
Sales fell 3.7 percent to 709 million rupees in the period, according to interim accounts filed with the stock exchange.
Administrative expenses more than doubled to 135 million rupees in the period, the accounts showed.
Quarterly earnings per share were 18 cents. EPS for the nine months to December 2018 were 70 cents with net profit at 216 million rupees on sales of 1.97 billion rupees
BPPL Managing Director and Chief Executive Anush Amarasinghe said the third quarter of the previous year benefited from a one-time surge in brush sales to the North American region following hurricanes that affected the east coast of the United States.
Such one-off sales were absent during the past quarter.
Gross profit for the period was marginally lower at 694 million rupees, although gross margins for the quarter picked up to match those of the 3rd quarter of the previous year, he said in a note accompanying the accounts.
“Gross margins were lower during the 2nd quarter of the current year as the quarter was affected by a higher proportion of plastic brush sales made with virgin polypropylene as against recycled polypropylene.
The group’s recycling facility for polypropylene based plastic materials was only completed towards the end of the 2nd quarter.
“Gross margins should continue to climb during the 4th quarter due to a full quarter’s impact of a depreciated Sri Lankan rupee, a higher proportion of recycled plastic brush sales and a drop in freight costs,” Amarasinghe said.
Group after-tax earnings for the period excluding an exchange loss was 330 million rupees against 295 million rupees in the previous year, a growth of 12 percent.
Group year-to-date pre-tax profit fell to 251 million rupees for the nine month period, from 323 million rupees for the same period in the previous year.
This was due to a non-recurrent and unrealized exchange loss on US dollar based loans taken to fund the new yarn and filament extrusion operations of 114 million rupees, Amarasinghe said.
The Sri Lankan rupee witnessed rapid depreciation against the US dollar during the period.
The firm also faced a higher effective tax rate of 14 percent compared to nine percent in the April to December 2017 period which also limited profit attributable to the company’s shareholders to 216 million rupees or 70 cents per share, Amarasinghe said.
The higher tax rate was following a hike incorporate tax rates in the November 2017 government annual budget as well the ending of a tax holiday for the group’s filament and yarn production subsidiary in March 2018.
The Group has in recent years diversified its business lines to include synthetic filament extrusion for other brush manufacturers and polyester yarn production for fabric mills.
These new lines cater to customers both in Sri Lanka and overseas and are expected to be dominant contributors to group financials over the medium term, Amarasinghe said.