Wednesday, May 19, 2010

Sri Lanka Hayleys makes annual net profit of Rs1.8bn

May 18, 2010 (LBO) - Sri Lanka's Hayleys said net profit shot up 471 percent to 1.8 billion rupees last year from a year ago as its core businesses recovered from recession, loss-making sectors turned around and it sold stakes in hotels.
A stock exchange filing said Hayleys group, which accounts for 2.3 percent of Sri Lanka’s export income, had sales of 38 billion rupees in the financial year ending March 31, 2010, up 18 percent from the year before.

Basic earnings per share for the 2009-10 financial year were 23.67 rupees compared with 4.15 rupees the previous year.

In the 2008-09 financial year Hayleys profits fell 31 percent to 311 million rupees on lower margins and export as the export-oriented group was hit by the global economic slump.

The conglomerate's net profit for the March 2010 quarter shot up 646 percent to 944 million rupees from the year before with sales up 45 percent 11 billion rupees.

The accounts showed the group reduced finance costs.

Hayleys chairman Mohan Pandithage said in the statement that key gloves and activated carbon making businesses "significantly improved" their performances in 2009-10.

At the same time the previously loss-making consumer products and fibre businesses made an "impressive turnaround", he said.

“This result represents the combined impact of internal initiatives to re-balance our portfolio and create an internal dynamism among employees at all levels, and sector-specific efforts to make businesses exposed to the global economic downturn leaner and more competitive,” Pandithage said.

The accounts showed a sharp increase in other income, which rose 197 percent to 757 million rupees in the full financial year, with the March quarter alone contributing 511 million rupees, up 1,319 percent from the previous year.

Carbotels, a subsidiary of Hayleys, disposed of its 50 percent holding in Royal Heritage Hotel and its 49 percent stake in Seashells Hotels for 175 million rupees with the sale resulting in a gain of 71 million rupees in the group income statement in the second quarter.

Hayleys group also increased its stake in its fabric making unit, Hayleys MGT Knitting Mills, and later sold off part of it, resulting in a gain of 75 million rupees in the income statement.

“The year also saw the single largest investment in the 132-year history of the company - the purchase of a controlling stake in Ceylon Continental Hotel - resulting in total investment in subsidiaries doubling in the year reviewed, and initiatives to rationalise the group’s businesses and strategies yielding spectacular results," Pandithage said.

During the fourth quarter, Hayleys acquired 89.76 million shares or a 51 percent in Ceylon Continental Hotel, on prime property in the heart of the capital Colombo, for 1.9 billion rupees.

“Similarly strategic investments were made in the plantation sector subsequent to the balance sheet date with the acquisition of a further one-third shareholding of Hayleys Plantations, thereby acquiring effective control of Talawakelle Tea Estates," Pandithage said.

The group's gloves manufacturing business accounted for 9.4 billion rupees in turnover and 835million rupees in operating profit, with purification products under which the activated carbon business come, contributing 5.0 billion rupees and 697 million rupees in turnover and operating profit.

Hayleys transportation business was the third largest contributor, helped by a strong fourth quarter, making an operating profit of 473 million rupees on a turnover of 3.5 billion rupees.

The group's agri-inputs business generated sales of 4.5 billion rupees and 389 million in operating profit.

The textiles sector represented by Hayleys MGT Knitting Mills, in which Hayleys now owns over a 60 percent stake, contributed 3.8 billion rupees to group turnover and 353 million to operating profit.

The fibre sector nearly doubled its operating profit to 125 million rupees and the group's agri-products bisiness converted a loss of 22 million rupees in the previous year to an operating profit of 147 million rupees.

The group's consumer products also contributed 3.5 billion rupees to turnover and made an operating profit of 179 million, up 153 percent over the previous year.

"Only the plantation sector posted a lower result due to a mandatory wage increase of over 40 percent in the year under review and crop losses due to bad weather," Pandithage said.

"However, this sector began turning around in the third quarter of the year and continues to do well in the current financial year."  - source - 

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