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Of the Group’s two largest manufacturing sectors, the Purification sector posted operating profits of Rs. 663.3 million for the period under review, despite contracted revenue stemming from a global downturn in the gold carbon industry. However, enhanced operational efficiencies and targeted high margin segments helped support the bottom line of the sector.
Similarly, the Hand Protection sector experienced trying operational circumstances during the latter part of the period under review, since the management was compelled to suspend operations at the factory at Rathupaswala. However the sector continued to remain profitable, recording operating profit of Rs. 494.6 million for the first half of the financial year.
Strong contribution to the Group’s overall profitability also stemmed from the Construction Materials sector which witnessed a profit expansion of 38% during the period under review, supported by stable world market prices for raw materials, strong growth in demand from the local construction sector together with market development initiatives.
Operating profits in the Agriculture sector rose by a significant 52% during the period under review as a result of conducive weather conditions as opposed to the same period in the previous financial year.
However, the Plantations sector was negatively affected by adverse weather conditions in key plantation locations during the second quarter. Wage hikes earlier in the year further added to cost escalations. Nevertheless, improved tea prices supported the sector, positioning it as a significant contributor to Group earnings.
Renewable energy led the strong profit growth in the Power and Energy sector. Industrial inputs, on the other hand, experienced slackened demand in certain key industrial sectors such as dairy, rubber and paint. Consumer Products posted a 39% growth in profitability, as the sector’s product portfolio was expanded, optimising synergies within the distribution network.
The Transportation and Logistics sector continued to record strong earnings as operating profit grew 13% during the period under review.
The future outlook for the sector is positive with policy reforms and infrastructure development in the port sector supporting business growth.
The Group’s Leisure and Aviation sector made a sound contribution spurred by positive operating profits recorded by The Kingsbury despite a more subdued earnings contribution by the resorts sub-sector represented by the Amaya Group. However, ongoing product development and expansions at key Amaya properties is expected to support growth in the latter half of the financial year.
Process restructuring and productivity enhancements leading to stronger customer relationships supported the Textiles sector in reaching profitability with sustained growth in earnings.
Speaking on the Group’s performance over the first six months of the financial year, Hayleys Chairman and Chief Executive Mohan Pandithage noted: “We are encouraged by the strong earnings growth despite the continued closure of a key export sector factory. The prolonged closure of this factory has resulted in the loss of valuable foreign exchange for the country and the loss of Rs. 400 million in turnover for the company during the second quarter, which is a serious cause of concern.”
The Board of Directors of Hayleys PLC comprises Mohan Pandithage (Chairman and Chief Executive), Dhammika Perera (Deputy Chairman), Rizvi Zaheed, Nimal Perera, Sarath Ganegoda, Rajitha Kariyawasan, Dr. Harsha Cabral PC, Dr. Mahesha Ranasoma, Mangala Goonatileke, Ranil Pathirana, Lalin Samarawickrama and Ruwan Waidyaratne.
