Singer acquisition ups Hayleys top line, but leveraged buy-out weighs on group profits

14 February 2018 10:43 am - 0     - {{hitsCtrl.values.hits}}

A A A

The acquisition of Singer Sri Lanka PLC in a blockbuster deal last year boosted Hayleys PLC’s top line, but the leveraged buy-out is now weighing on the country’s most diversified conglomerate’s bottom line performance. 


The interim results filed with the Colombo Stock Exchange showed the Hayleys group reporting earnings of Rs.2.37 a share or Rs.178 million for the October-December quarter (3Q18) compared to Rs.7.10 a share or Rs.532.5 million profit in the corresponding period, last year. 


Although the two quarters are not comparable due to the Singer acquisition in September 2017, the heavy borrowings that went into funding the deal have led to shooting up in the finance cost from at least a billion rupees for the quarter. 


The net finance cost for the quarter was flirting with Rs.2.0 billion for the quarter under review, while the previous year’s corresponding quarter figure stood at Rs.960 million.  

The group’s very high leverage may not be a significant issue given Singer’s around the year cash generating capacity, analysts opine. 


Singer Sri Lanka, which now forms the part of the Hayleys group’s consumer products operations, is the second largest within the group by revenues and profits, after transport and logistics.


However, in recent times, Singer is also facing a tough time due to weak sales as a result of poor disposable incomes and bad weather conditions in the agricultural areas, which dampened the purchasing power of the country’s agri community that forms Singer’s key market segment. 


The Hayley’s group’s consumer durables segment recorded a significant improvement in turnover, which stood at Rs.19.9 billion compared with a previous Rs.3.86 billion, while the segment’s profit rose from Rs.90.18 million to Rs. 965.7 million for the 9 months ended December 31, 2017.  


For the quarter, Hayleys group reported a top line growth of 66 percent year-on-year (YoY) to Rs.49.9 billion while for the 9 months revenue rose by as much as 37 percent YoY to Rs.112. 4 billion. 
Meanwhile, for the 9 months, the group reported earnings of Rs.2.62 a share or Rs.196.6 million compared to Rs.19.53 a share or Rs.1.46 billion in earnings during the corresponding period, last year. 


“It has been a challenging nine months for the Hayleys group despite the remarkable growth and expansion displayed in the top line performances of all of our diverse business segments. 


Our continued growth drive, which we have strategically embarked upon, has reflected in an increase in the finance cost reported for the period”, Hayleys PLC Chairman and Chief Executive Mohan Pandithage said in an earnings release. 


“Although the higher finance costs have had a negative impact on group profits during the period, measures are already being implemented to realign the financial position in order to bolster profitability and recover momentum moving into the final quarter of the financial year, which is traditionally the strongest performing quarter for the group. Coupled with exponential gains from the investments entered into over the past year, we anticipate a strong growth outlook for the group moving forward,” he added. 


Hayleys has interests in transportation and logistics, power and energy, leisure, plantations, agriculture, textiles, hand protection, purification products, eco-solutions and a few other unclassified sectors.


Group’s transport and logistics segment—largest by revenue and profits— reported Rs.25.8 billion in revenues and Rs.1.93 billion in operating profits, up from Rs.17.9 billion and Rs.1.14 billion a year ago. 


By the end of December 2017, the billionaire businessman Dhammika Perera held little over 50 percent in the Hayleys group.

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

  Comments - 0

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

 

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




ANYTHING FOR MONEY

Some unregulated online lenders are remotely taking control of phones of thos

Frontline cops charge negligence by high-ups worsened police cluster

The police have done an invaluable service in the frontlines to combat the CO

US Vice President-Elect Kamala Harris’s Key Sri Lankan Tamil Aide

An overwhelming feeling of relief has descended upon the world-not merely th

The virus may be spreading much faster than official data suggest

The daily case reports from the Epidemiology Unit are the only data we have t

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.