The Hayleys group knitted fabric manufacturing unit, Hayleys Fabric PLC, saw its September quarter net profit falling as much as 70 percent year-on-year (YoY) to Rs.30.5 million as the top line fell and costs rose, the interim results showed.
The earnings per share deteriorated to 15 cents from 49 cents a year ago.
This is the second quarter in a row the company has seen its profits declining since it recorded a net profit after the continuous losses made during the recent past.
The top line fell 6 percent YoY to Rs.2.21 billion and the cost of sales fell 5 percent YoY to Rs.1.94 billion. The gross profit declined 12 percent YoY to Rs.275.18 million.
The company, formerly known as Hayleys MGT Knitting Mills PLC, was rebranded in July 2015 as Hayleys Fabric PLC to align the business with the brand value of its parent, Hayleys.
The company 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 launched its own branded fabric ‘Inno’ in February 2014 moving up in the value chain through innovation.
During the financial year ended March 31, 2016, the company made a net profit of Rs.261.6 million, up 190 percent YoY, marking a year of recovery for the firm. Hayleys Fabrics PLC is an indirect exporter as it supplies to the local garment manufacturers. Meanwhile, the administrative costs during the quarter rose 45 percent YoY to Rs.181.6 million. The net finance cost rose 55 percent YoY to Rs.42.6 million during the quarter. During the six months ended September 30, 2016, the company had retired US $ 4.2 million worth of loans but has taken US $ 5.5 million worth of new long-term loans. US dollar is the company’s reporting currency.
Meanwhile, for the six months, the company made a net profit of Rs.63.2 million or 30 cents a share, which is a 54 percent contraction YoY on revenue of Rs.4.26 billion, down 3 percent YoY.
As of September 30, 2016, Hayleys PLC held a 58.96 percent stake in the company followed by a 5.42 percent stake by Ceylon Investment PLC and 5.24 percent by Ceylon Guardian Investment Trust PLC.
The state-controlled private sector pension fund, the Employees’ Provident Fund, had a 2.67 percent stake in the company being the fourth largest shareholder.