Sri Lanka’s Lanka Tiles net down 13.6-pct in Dec 2017
ECONOMYNEXT – ProSri Lanka’s protected Lanka Tiles profits fell 13.6 percent in the December 2017 quarter on shrinking margins, interim financial results filed with the stock exchange showed.
The company, reported earnings of 6.57 rupees per share in the quarter. In the nine months to end December 2017 earnings were 15.64 rupees per share on total profits of 830 million rupees, down 5.4 percent from a year ago.
The group has benefitted from high import tariffs on tiles and sanitary ware which has kept construction costs artificially high, pushing up housing costs of the entire population, critics have said.
Revenues rose 10.8 percent to 1.9 billion rupees, cost of sales rose at a faster 24 percent to 1.2 billion rupees, contracting gross profits 6 percent to 739.3 million rupees.
"Import taxes account for as much as 80 percent. Despite this, tiles from India and China are still a lot cheaper and enjoy a 60 percent share of the Sri Lanka market. It’s a key threat to the domestic tiles industry," says Naveed Majeed, Vice President Research at Asia Securities.
"Also, Lanka Tiles is offering steep discounts to remain competitive," explaining Lanka Tiles’ shrinking margins," he said.
Exports also grew 56 percent in the quarter to 82.7 million rupees, accounting for 3.8 percent of total revenue.
Distribution costs increased 10.6 percent in the quarter to 237.6 million rupees. Administrative costs fell 9.7 percent to 109.6 million rupees.
The company said it invested an undisclosed sum in a 51 percent stake in Lankatiles Private Limited, a company incorporated in Bengaluru, India which will distribute locally manufactured tiles to the subcontinent.
Earlier that year Lanka Tiles entered into outsourcing agreement with India-based Ambani Vitrified to source supplies for the Sri Lankan market.
The company gets 90 percent of the demand locally while importing the balance from India, China and Malaysia, it said in the 2016/17 annual report. (COLOMBO, February 07, 2018)