Hayleys 1Q turnover up 21% to Rs. 29 b; PBT down 61% to Rs. 408 m

Backed by a stronger performance of its transportation and logistics sector, the Hayleys Group said it recorded a 21% Year-on-Year (YoY) improvement in topline up to Rs. 29.2 billion during the three months up to 30 June 2017 (1QFY18).

Despite the improved revenue, it was a challenging quarter for the group, during which Profits Before Tax (PBT) contracted 61% YoY down to Rs. 407.7 million.

“Despite lower profits during the first quarter, we remain confident that group profits will rebound over the coming quarters as multiple strategic investments made over the recent past begin to generate returns and contribute positively towards group profitability.”

“In particular, we note with satisfaction the consistently positive growth displayed by our transportation and logistics segment, represented by Hayleys Advantis, and the positive turnaround recorded within the plantations sector as a result of favourable market conditions,” stated Hayleys Chairman and Chief Executive Mohan Pandithage.

The group’s transportation and logistics segment generated revenue of Rs. 7.24 billion during the quarter. Operating Profits during the quarter rose to Rs. 430.9 million.

Turnover in the plantation sector increased to Rs. 3.49 billion in 1Q18 while operating profits improved to Rs. 99.4 million on the back of stronger tea prices at the Colombo Tea Auction during the period under review.

Notably, following the completion of one of Sri Lanka’s largest solar power plants in Welikande, the group’s power and energy sector also recorded notable improvements in top and bottom line performance, generating Rs. 404.9 million in revenue, while operating profits within the segment rose to Rs. 229.5 million.

Adverse weather conditions negatively impacted the performance of the group’s agriculture segment, which recorded a contraction in revenue of Rs. 2.54 billion in 1Q18. This notable drop in production resulted in operating profits dropping to Rs. 83.3 million.

The group’s Hand Protection and Purification sectors’ profitability were affected by a steep increase in raw material prices as operating profits declined to Rs. 38.9 million and Rs. 160.9 million respectively.

The group’s leisure sector was able to maintain relatively stable revenues to close the quarter at Rs. 1.1 billion. However, the sector’s ability to generate profits was hampered due to the substantial refurbishments being carried out at Kudarah Island Resort in the Maldives. The segment completed the quarter with an operating loss of Rs. 106.9 million. However, with refurbishments having since been completed just prior to the end of 1Q18, the group anticipates significant improvements in profitability moving forward.

Profit has also been impacted by an increase in the group’s net finance cost, which rose by 37% YoY to Rs. 875.6 million in 1Q18, mainly due to an increase in market rates and the higher level of investment from the group in key business segments with a view to enhancing growth potential over the medium to long term.

Established in 1878, Hayleys Plc is one of Sri Lanka’s largest multinational business conglomerates driving a globally competitive business portfolio cutting across the manufacturing, agriculture and services. The group is internationally recognised as a leader in innovation and currently operates manufacturing facilities in Indonesia and Thailand, and marketing operations in Australia, India, Bangladesh, Italy, Japan, the Netherlands, the UK and the US. The group accounts for approximately 3.53% of Sri Lanka’s export income, 3.4% of tea and 3.8% of rubber production.

The Board of Directors of Hayleys Plc comprises Chairman and Chief Executive Mohan Pandithage, Co-Chairman Dhammika Perera, Rizvi Zaheed, Sarath Ganegoda, Rajitha Kariyawasan, Dr. Harsha Cabral PC, Dr. Mahesha Ranasoma, Lalin Samarawickrama, Ruwan Waidyaratne, Hisham Jamaldeen, Aravinda Perera and Noel Joseph.