Hayleys Fabric 3Q net triples over lower costs

29 January 2016 06:22 am - 0     - {{hitsCtrl.values.hits}}

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Hayl eys group kni t t ed fabr i c manufacturing unit, Hayleys Fabric PLC, tripled its net profit to Rs.71 million for the quarter ended December 31, 2015 (3Q16) from Rs.17.4 million posted during the corresponding quarter last year, the interim results released to the Colombo Stock Exchange showed. The earnings per share (EPS) was 34 cents, up from 9 cents from a year ago.

The company’s share ended at Rs.19.80, up 10 cents or 0.51 percent, at yesterday’s close. According to the financials, the better performance could be attributed to better control in both direct and indirect costs and the lower interest cost as a result of retirement of a large chunk of long-term debt. “It was due to both the efficiency improvements and the company’s wise sourcing of raw materials,” said Managing Director Rohan Goonetilleke in an earnings call. However, the top line narrowed by 6 percent year-on-year (YoY) to Rs.2.2 billion as the company’s own branded fabric ‘Inno’ failing to take off as expected. The company launched its own branded fabric Inno in February 2014 moving up in the value chain through innovation.

Formerly known as Hayleys MGT Knitting Mills PLC, the company was rebranded in July 2015 as Hayleys Fabric PLC to align the brand with the business, together 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. Hayleys Fabrics PLC is an indirect exporter as it supplies to the local garment manufacturers. The direct costs or the cost of sales declined by 9 percent YoY to Rs.1.89 billion and the gross profit increased by 23 percent YoY to Rs.279.2 million. The gross profit margin rose to 12.9 percent from 9.8 percent a year ago. The distribution expenses rose by 9 percent YoY to Rs.21.8 million, while the administrative expenses declined by 7 percent YoY to Rs.145.5 million. The net financing cost dropped by 8 percent YoY to Rs.28.1 million as the company retired its long-term debt by as much as Rs.323.1 million during the 12 months to Rs.345.2 million. Meanwhile, for the nine months ended December 31, 2015, the company posted a net profit of Rs.208.8 million, up 288 percent from the same period last year. The EPS improved to Rs.1 from 29 cents a year ago. As of December 31, 2015, Hayleys PLC held a 58.96 percent stake in the company followed by a 5.42 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.
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