Higher depreciation, interest and energy costs and slowdown in domestic business have impacted the performance Piramal Glass PLC, the only glass bottle maker in Sri Lanka.
The financial accounts released to the Colombo bourse last week showed Piramal Glass recording earnings of 10 cents a share or Rs.92.4 million for the January-March quarter (4Q18) against 22 cents or Rs.209.7 million for the same period last year.
Although the company’s top line grew during the quarter, higher cost of sales resulted in a lower gross profit compared with the previous year.
The operating profit for the period after selling & distribution and administrative expenses stood at Rs.273.8 million, down from Rs.333.5 million a year ago.
Meanwhile, for the financial year ended March 31, 2018, Pirimal Glass recorded earnings of 36 cents per share or Rs.343.8 million against earnings of 51 per share or Rs.485.5 million a year ago.
Although the top line improved marginally to Rs.6.8 billion, the company said it was the highest ever turnover recorded in its history.
However, despite this, Piramal Glass said its domestic revenue saw a dip of 16 percent year-on-year (YoY) to Rs.4.6 billion as beverage and liquor segments were affected with the introduction of new taxes and levies by the government.
The adverse weather conditions that affected agro sales also contributed to the fall in domestic sales.
Piramal Glass at its manufacturing capacity of 300 tonnes per day has the capability to offer glass containers in different shapes and colours for multiple industries such as food, liquor, pharmaceuticals, agrochemicals and beverages.
However, the company’s export segment grew healthy during the year with higher exports to existing markets and entry into several new markets.
As a result, the export turnover for FY18 topped Rs.2 billion compared to Rs.1.2 billion in FY17.
“The exports increased mainly in the U.S. and Canadian markets with the company gaining entrance to several new markets which include Malaysia, Africa, Vietnam and Myanmar.
The export to U.S. has grown by over 150 percent, Australia by 72 percent and a six fold increase in the Canadian markets,” Piramal Glass said in an earnings release.
Meanwhile, the gross profit for the year improved marginally while the operating profits increase 13 percent YoY to Rs.869 million.
“These results were achieved despite the high impact of depreciation on the investments made during the year. The depreciation increased by 31 percent from Rs.553 million to Rs.722 million,” the company said.
The finance costs for the year also rose to Rs.328.2million from Rs.176.4 a year ago as Piramal Glass took a long-term loan of Rs.3 billion to realign and upgrade its production facility in Horana.
The company also said higher furnace oil prices and fluctuating LP gas prices also impacted its performance.
The energy price is likely to be a key determinant in the firm’s future performance as the government recently gave its nod to hike LP gas prices.
However, the prices of furnace oil did not change with the recent upward revision to diesel, petrol and kerosene prices.
The parent, India’s Piramal Group, has 56.45 percent stake in the firm while Sri Lanka’ State-run pension fund has 9.51 percent. Norges Bank, the giant wealth fund operating under Norway’s central bank, also has a 2.93 percent stake in Piramal Glass being the third largest shareholder.
The company said following the consistent policy of a 50 percent payout ratio, the board of directors have proposed a dividend of 18 percent.