The Hayleys group’s knitted fabric maker, Hayleys Fabric PLC, turned a net loss of Rs.25.2 million or 12 cents a share for the quarter ended June 30, 2017 (1Q17) from a net profit of Rs.32.6 million recorded during the corresponding period last year as the floods hampered the operations.
The sales were virtually flat around Rs.2.0 billion for the quarter but the gross profit fell by 19 percent to Rs.214.4 million from a year as the costs edged up when the top line stood flat.
“The Hayleys Fabric production facility was forced to shut down in the last week of May due to the flooding of Kalu Ganga,” the company said in a statement.
Meanwhile, the production was also disturbed as “most of the employees’ houses were under water for several days and this resulted in heavy absenteeism and a loss in production volumes by almost half during the first week in June,” the statement added.
In April, Hayleys Fabric generally makes a loss due to the factory closure for 10 days for the Sinhala and Tamil New Year holidays and annual preventative maintenance. But in May and June the company also saw a cumulative loss of 150 tonnes of sales turning the entire quarter into a loss.
April-June is the second quarter in a row where Hayleys Fabric made a loss as the company made a loss of little under Rs.2.0 million during the January-March quarter, the company’s fourth and final quarter, caused by higher overheads and finance costs.
During the 12 months to June, Hayleys Fabric borrowed close to Rs.700 million through long-term arrangements.
The company confided that it could return to profits during its second quarter as the order book remains full.
Hayleys Fabric offers end-to-end solutions from design, development, printing, brushing and sueding of pure and blended polyester and cotton fabrics and delivers 2.5 million metres of fabric each month to apparel manufacturers from the factory located in Narthupana Estate, Neboda in the Western Province.
The company, formerly known Hayleys MGT Knitting Mills PLC, was rebranded in July 2015 as Hayleys Fabric PLC to align the brand with the business together with brand value of its parent, Hayleys.
The company launched its own branded fabric ‘Inno’ in February 2014, moving up in the value chain through innovation.
The company yesterday said Inno enabled them to attract higher value products.
As of June 30, 2017, Hayleys PLC held a 58.96 percent stake in the company, followed by a 5.42 stake by Ceylon Investment PLC and 4.52 percent by Ceylon Guardian Investment Trust PLC.
The state-controlled private sector pension fund, the Employees’ Provident Fund, held a 2.67 percent stake in the company being the fourth largest shareholder.