Sri Lanka’s Hayleys profits down 72-pct in March

ECONOMYNEXT – Profits at Sri Lanka’s Hayleys Plc, which is in glove and activated carbon exports, consumer durables, agriculture and power fell 72 percent from a year earlier to 230 million rupees in the March 2018 quarter, as borrowings and interest grew, interim accounts showed.

The group reported earnings of 3.07 rupees for the March quarter.

For the year to March Hayleys reported earnings of 3.54 rupees per share on total profits of 265 million rupees down 74 percent from a year earlier. The stock closed at 150 rupees up 1.35 Tuesday.

Revenues grew 11 percent to 56.4 billion rupees during the March quarter, cost of sales grew at a faster 12 percent to 43.3 billion rupees, direct interest costs grew 26 percent to 349 million rupees, allowing gross profits to grow at a slower 8 percent.

Unspecified other income grew sharply to 1.1 billion rupees from 397 million rupees, while unspecified administration expenses grew 49 percent to 8.0 billion rupees.

In January the group sold Hunas Hotels booking a 445 million rupees.

Net finance costs grew 39 percent to 2.7 billion rupees.

Story continues below
Story continues below

Short and long term borrowings grew by 20.6 billion rupees from 92.6 billion rupees to 113.2 billion rupees during 2018. Full year interest costs grew to 10.5 billion rupees in 2018 from 5.9 billion rupees a year earlier.

Hayleys has taken on debt for acquisitions, including Singer Sri Lanka, a consumer durables firm.

..[T]he Group will continue to take strategic and focused measures aimed at rationalizing finances , however as a Group, we are ready for a challenging macroeconomic environment,” the Hayleys Chairman Mohan Pandithage told shareholders.

Sri Lanka’s central bank generated monetary instability in 2018 just as the economy recovered, and the rupee fell from 153 to 182 during 2018, partly worsened by a political crisis.

While a falling rupee will help export business by destroying real salaries of workers, but the currency collapse also kills domestic demand by destroying salaries and savings of an entire population.

Corrective action in the form of prolonged liquidity shortages and capital flight will also add to a demand contraction. (Colombo/May22/2019)