Haycarb PLC’s new pricing strategy appears to have boded well for the company since it changed tact to raise the prices of its products as it enabled them to tamp down the pressure from the rising raw material costs amid heightened competition from some regional players.
The coconut shell-based activated carbon maker of the Hayleys group recorded strong growth in revenues both on year-on-year (YoY) as well as quarter-on-quarter during the March quarter (4Q19), which translated into solid bottom line performance.
The company recorded revenue of Rs.6.6 billion during the quarter under review, up 43 percent YoY and up from Rs.5.3 billion in end-December 2018.
The gross profit for the quarter rose by 33 percent YoY to Rs.1.22 billion while the operating profit rose by 30 percent YoY to Rs.505.1 million, despite some sharp increase in the distribution and administrative expenses.
The company changed its strategy around October, last year, by way of raising the prices of activated carbon to reflect the high raw material costs.
This is amid a potential risk of losing business to India and the Philippines, the largest coconut shell-based activated carbon producing countries in the region.
But the move did not backfire as Haycarb continued to make gains in the top line, which was also supported by the group’s other value-added products.
The company reported earnings of Rs.14.80 a share or Rs.439.6 million for the three months under review, compared to Rs.9.19 a share or Rs.273 million reported for the same period a year ago.
Meanwhile, for the full year (FY19) Haycarb reported earnings of.32.16 a share or Rs.955.4 million, compared to Rs.22.63 a share or Rs.672.4 million reported for the previous year.
Haycarb PLC is the pioneer manufacturer of coconut shell-based activated carbon and sells across the world through its marketing offices in the USA, UK and Australia.
The company has manufacturing facilities in Sri Lanka, Thailand and Indonesia.
Almost 80 percent of Haycarb’s turnover is generated in Asia, the USA and Europe and almost 50 percent of its carbon sent worldwide is used for water treatment, followed by gold recovery and air treatment. Apart from activated carbon, the Haycarb group also offers purification solutions via its environmental engineering arm, Puritas Private Limited and the group expects it to be a key contributor to its earnings in future.
Meanwhile, Haycarb earlier this year said the availability of charcoal, the key raw material used in activated carbon, is improving in Sri Lanka, India and Indonesia, due to the improved coconut crop and as such, the company has gradually passed that benefit to the customers.
During the period under review, the company has successfully forged new customer relationships and accessed new market segments, Haycarb said.
Meanwhile, in its commitments towards sustainability, Haycarb has propagated the environmental friendly charcoal pits under the ‘Haritha Angara’ scheme in Sri Lanka and the operation of environmental friendly vertical charcoal kiln project in Thailand.
Diversified conglomerate Hayleys PLC owns a 67.73 percent stake in Haycarb while the Employees’ Provident Fund owns 4.77 percent of shares being its second largest shareholder.