COLOMBO (EconomyNext) – With rapid growth in the construction sector, Sri Lanka’s Hayleys group plans to expand production at its aluminium extrusions subsidiary which has a dominant market share having acquired a rival.
A land has been bought to enable expansion in the future of the group’s construction materials business under the Alumex Group given potential for growth, Hayleys Chairman and Chief Executive Mohan Pandithage said.
Applications for aluminium extrusions in the construction sector are increasing, replacing wood as a more cost effective material, he said.
The purchase by Alumex Group of Alufab PLC during the year increases the group’s dominance in this sector providing it a broad base for developing the market, Pandithage told shareholders in the company’s annual report.
Alumex, which manufactures and distributes aluminium extrusions for industrial and domestic construction purposes, contributed four percent of group revenue and six percent of operating profit in the financial year ended March 2015.
Sales of Hayleys construction materials business grew 20 percent to 3.3 billion rupees during the year and pre-tax profits grew 32 percent to 628.7 million rupees
The growth was supported by stable aluminium prices and the commissioning of its new powder coating plant, Pandithage said.
Sales growth of Alumex Group, which has a market share of 53 percent, came from continued expansion in the country’s construction sector and the group’s increased capacity levels.
The reduction in global primary aluminium prices during the year had a favourable impact on the group’s profitability margins, the report said.
“Demand for aluminium extrusions has continued to surge in line with the expansion of the country’s construction sector,” it said.
Construction sector growth was 20.2 percent in 2014, accounting for 9.7 percent of the country’s GDP.
The government has given import tariff protection to domestic suppliers of construction material and imposed rules that property developers must give preference to buying from local sources.