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Sri Lanka Haycarb's Sept net down on high raw material prices

www.lankabusinessonline.com    11/2/2011 11:13:00 AM    ReadCount:540

Sri Lankan activated carbon manufacturer Haycarb's September 2011 quarter net profit fell four percent to 141 million rupees from a year ago as high raw material prices eroded margins.
Sales of the firm, part of the Hayleys group, rose 22 percent to two billion rupees during the period which saw cost of sales rising 29 percent to 1.6 billion rupees, a stock exchange filing said.
Basic earnings per share of the coconut shell-based activated carbon manufacturer fell to 4.75 rupees from 4.96 rupees the year before.
In the six months to September 2011, Haycarb's net profit fell to 266 million rupees from 305 million rupees the previous year while EPS fell to 8.95 rupees from 10.26 rupees.
A company statement said there was "stable demand" in global markets and the company’s reliable supply stream of high quality carbons with a product mix of value-added carbons protected its top line "in a period of narrowing margins".
Haycarb Managing Director Rajitha Kariyawasan said profits were lower compared with the same period a year ago where price pressure on charcoal was less significant.
But he said the result "reflected a stable level of profit in the context of the unprecedented increases in the prices of coconut shell charcoal, its principal raw material."
Coconut prices have been falling in the island in recent months owing to better harvests.
Kariyawasan said that raw material prices had increased by more than 40 percent since March 31, 2011 in Sri Lanka, Haycarb’s largest manufacturing base, and similar trends in other overseas plants at different levels, had "squeezed gross margins".
Nevertheless, the company was able to procure charcoal supplies at high prices without any disruption of carbon supplies to its customers.
This helped enhance its reputation as a reliable and a quality supplier during a period of serious supply constraints in coconut charcoal and the carbon market, Kariyawasan said.
Haycarb had decided to invest heavily to build its charcoal inventory to overcome raw material shortages, he said.
The company had also continued to invest in additional value-added carbon projects for new applications, and expanding and upgrading its manufacturing locations.
A new joint venture between Puritas, a fully owned subsidiary of Haycarb, and Veolia Water, India, had been awarded the contract for a large waste water treatment facility for the National Holiday Resort, Passikudah, in the east coast on design, build and operate basis, Kariyawasan said.
This was the first project on this model in Sri Lanka in the waste water management business and was part of a strategy to develop the capability of Puritas to service medium and large scale infrastructure projects in the country, in collaboration with a reputed international leading player, he added.