Hayleys achieves record-breaking Rs. 20 b profit before tax in 1Q

• Export, Transportation and Logistics businesses drive foreign currency earnings

The Hayleys Group yesterday reported strong growth in revenue and earnings in the first quarter of the financial year ending 31 March 2023. 

Consolidated Earnings for the quarter increased over four-fold to Rs. 20 billion, with strong performances in export, transportation and logistics businesses enabling greater resilience to macro-economic challenges that prevailed.

Consolidated Revenue has increased by 75% Year-on-Year (YoY) to Rs. 123.64 billion, with key export sectors of Purification, Textiles, Hand Protection and Eco Solutions contributing over 50% of Revenue during the quarter. The Textiles Sector, represented by Hayleys Fabrics PLC, marked a near tripling of Revenue and has emerged as the largest contributor to Group’s export Revenue, supported by the consolidation of the operations of South Asia Textiles Ltd., which was acquired in April 2021.

The Transportation and Logistics sector contributed Rs. 35.87 billion, the highest revenue contribution by any Sector.

The Group’s Retail Sector - represented primarily by Singer (Sri Lanka) PLC – was impacted by import restrictions and the sharp depreciation of the Rupee. Accordingly, Singer’s Revenue recorded a decline of 4% YoY while Profit after Tax has fallen sharply due to the adverse exchange rate movements and the sharp increase in finance costs.

The Leisure Sector, although recording an improvement over the corresponding quarter of last year continues to be in the red, with the performance of the local sector impacted by the uncertainty and volatility in the Sri Lankan tourism industry.

The Group’s Consolidated Borrowings increased to Rs. 193.48 billion, which is mainly attributed to the exchange rate impacts on the foreign currency denominated borrowings and working capital facilities to fund increased operational activity across key sectors. The gearing ratio however, reduced marginally to 0.61X from 0.64X in the corresponding quarter of last year, supported by stronger profit generation.

The Hayleys share price appreciated in recent weeks and is currently trading at Rs. 114.25. With a 49% increase year-to-date, the share has outperformed the ASPI which appreciated by 3% during the same period.

As a diversified Group, Hayleys said it has been able to withstand the pressures arising from Sri Lanka’s macro-economic and socio-political dynamics. Despite continued external challenges, the Group’s earnings are expected to remain robust, particularly due to the continued success of the export-oriented and transportation and logistics businesses which will in turn support the generation of foreign currency.

“Although the operating environment has been extremely challenging for businesses following the outbreak of the COVID-19 pandemic in April 2020 and the country’s political and macroeconomic instability, the Hayleys Group has posted continuously record-breaking earnings over the last three years,” the diversified blue chip said in a statement.