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Sri Lankan tile maker adds branches as sales growth slows

ECONOMYNEXT – Lanka Floortiles plans to expand its branch network as sales growth slowed although it has managed to retain market share and widened profit margins as costs fell, a report said.

The firm, which makes glazed ceramic floor tiles and is part of the Royal Ceramics Lanka tile manufacturing group, is also trying to increase exports.

Lanka Floortiles aims to open four new branches each in the 2016 and 2017 financial years, Bartleet Religare Stockbrokers said in a report.

“We feel (Lanka Floortiles) would grow as a proxy to national growth and more to workers’ remittances,” it said, referring to remittances from migrant workers which has helped drive real estate market growth.

Local sales continued to dominate company revenue with a contribution of 96 percent for FY 2015.

“However, the growth in local sales has contracted since last year, from 12.7 percent year-on-year in FY 2014 to 4.4 percent in FY 2015,” the report said.

Despite intense competition Lanka Floortiles has retained its market share at 23 percent.

Earnings before interest and tax margins for the latest quarter increased to 25.7 percent from 17.7 percent in the fourth quarter of the 2014 financial year.

The growth was supported by a 8.2 percent decline in cost of goods sold given the management’s continuous focus on cost reduction and lower finance costs and global energy prices, Bartleet Religare Stockbrokers said.

(Colombo/July 22 2015)





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