Higher finance costs, lack of capital gains affect Hayleys’ bottom line

9 November 2012 08:15 am - 0     - {{hitsCtrl.values.hits}}

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Higher finance costs, rupee depreciation and lack of one-off gains originating from sale of holdings in subsidiaries during the first half of the financial year 2012/13 have adversely impacted the profitability of Hayleys PLC, a diversified blue chip listed on the Colombo Stock Exchange.

Accordingly, the consolidated net profit of Hayleys fell 79 percent Year-on-Year to Rs.372.4 million during the September quarter (2Q13) amidst net finance costs surging 79 percent YoY to Rs.494 million.

The net profit for the first half (1H13) also fell 71 percent YoY to Rs.591.5 million amidst a 144 percent YoY steep rise to Rs.1.1 billion in net finance costs.

The other income earnings of the group also saw a steep fall YoY. During the second quarter of 2012 Hayleys sold 33.3 percent shareholding in Hayleys Plantation Services (Pvt) Ltd to DPL Plantations (Pvt) Ltd, a wholly owned subsidiary of Dipped Products PLC which is a Hayleys Group Company.

However, despite the challenging external business environment prevailed in the country, the group was able to see growth in its revenue, both quarterly and half yearly, while keeping sales costs down.

The net turnover for 2Q13 grew 7 percent YoY to Rs.17.5 billion while it went up 12 percent to Rs.34.7 billion in 1H13.

The basic earnings per share during the 2Q13 stood at Rs.4.97, down from Rs.23.73 recorded in the corresponding period of the previous year.

“Despite the strong business performance of the Group, profits would have been higher if not for an increase in finance costs due to interest rates and the impact of Rupee depreciation on the foreign currency borrowings of export companies. However, we are confident that with the recent stabilization of interest rates and the Rupee, the situation would improve,” Heyleys Chairman Mohan Pandithage said.

He also said that the performance of the group during the first half is strong and all the major business sectors recorded growth.

“Sectors such as Purification, Hand Protection, Plantations, Transportation and Logistics and Power and Energy have seen very significant earnings growth compared to the previous year, in spite of tough conditions in key export markets,” he noted.

A segmental analysis showed that hand protection sector had recorded a turnover of Rs.7.3 billion during 1H13 against Rs.7 billion in recorded in 1H12.

The turnover of the purification products sector rose to Rs.5.8 billion from Rs.3.7 billion while construction material sector’s turnover rose to Rs.1.17 billion from Rs.990 million.

The transportation & logistics sector’s turnover also rose significantly to Rs.3.3 billion from Rs.2.4 billion while turnover of consumer products and textiles remained flat YoY.

The power and energy and leisure and aviation sectors of the group also recorded considerably higher turnovers while the investment and services sector saw a dramatic drop in earnings.

Business tycoon Dhammika Perera directly held 41.28 percent of Hayleys as at September 30, 2012.
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