The Hayleys group’s coconut shell-based activated carbon manufacturer, Haycarb PLC saw its net profit increasing marginally for the quarter ended June 30, 2015 (1Q16) amid slowdown in demand, cheap competition and currency depreciations.
The net profit for the quarter rose only 4 percent year-on-year (YoY) to Rs.135.3 million. The earnings per share improved 15 cents to Rs.4.55.
The revenue rose 20 percent YoY to Rs.2.91 billion while cost of sales rose 17 percent to Rs.2.25 billion.
The administration expenses of the company rose 21 percent to Rs.400.7 million and reported a net finance cost of Rs.26.6 million against a net finance gain of Rs.11 million in the same quarter of the previous year.
Haycarb PLC Managing Director Rajitha Kariyawasan said the downturn in the gold mining industry coupled with significant depreciation of currencies in key European, Japanese and Australian markets have posed a significant strain to protect margins.
Activated carbon is widely used in the absorption of gold cyanide complexes in gold processing. But the lower gold prices that have been prevailing for some time has resulted in a slowdown in mining activities.
The low-cost competition from smaller manufacturers in the Philippines, Indonesia and India and continued difficulties in charcoal procurement especially in Sri Lanka has resulted in a very challenging period in the near term.
Against this backdrop, the Haycarb group will focus on lean initiatives to achieve cost savings and pursue its strategy of increasing its market share in the value-added carbon segment.
At the same time a significant thrust is made to increase its direct marketing presence in the USA, through the group’s new structure at Haycarb USA.
Kariyawasan further added that growth in its environmental engineering arm Puritas (Pvt.) Ltd is expected to contribute more to the profitability of the group.
Haycarb is the pioneer manufacturer of coconut shell activated carbon in any coconut producing country with manufacturing facilities in Sri Lanka, Thailand and Indonesia supported by marketing offices in the USA, UK and Australia.