PGP Glass exports fall 22% as furnace overhaul forces shift to home market

PGP Glass Ceylon PLC, the country’s sole glass packaging manufacturer, saw export sales fall 22 percent to Rs. 5.22 billion in the financial year ended 31 March 2026, from Rs. 6.72 billion a year earlier, as a two-month old repair of its Horana furnace forced management to redirect scarce production capacity to protect domestic supply.

Domestic revenue, in contrast, grew 10.23 percent to Rs. 14.12 billion from Rs. 12.81 billion, according to the company’s annual report, helping keep group revenue broadly steady at Rs. 19.35 billion, down marginally from Rs. 19.53 billion.

Profitability, however, slipped. Profit after tax eased to Rs. 4.05 billion from Rs. 4.16 billion, while profit before tax fell to Rs. 5.14 billion from Rs. 5.23 billion, as gross margins compressed to 31.65 percent from 33.36 percent amid the disruption. 

The immediate trigger was a scheduled cold repair of the Horana furnace, commissioned in 2007 and last re-lined in 2016, which underwent a planned two-month shutdown from January to March 2026.  

The Rs. 4.8 billion overhaul was partly funded through a Rs. 2.5 billion, three-year term loan from Hatton National Bank PLC at a fixed rate of 9.65 percent per annum — the company’s first significant recourse to long-term debt after ending the previous year debt-free — with the balance met through internal accruals. Packed glass tonnage fell to 69,285 tonnes from 82,414 tonnes as a result.

To keep domestic supply lines running through the shutdown, PGP Glass leaned on its Indian parent, PGP Glass Private Limited, ultimately controlled by US private equity firm Blackstone Inc. Purchases of bottles from the parent more than tripled to Rs. 922 million from Rs. 275 million during the year, while trading sales bought-in stock rather than in-house production — rose by Rs. 0.72 billion to Rs. 2.39 billion in the second half alone, filling the gap left by the shutdown.

PGP Glass Ceylon Chairman Vijay Shah said in the company’s annual report that earlier furnace-related issues had affected volumes and capacity utilisation, requiring a temporary reduction in export volumes to safeguard domestic supply. “Despite this disruption, we largely sustained sales by combining in-house production with carefully managed trading interventions and inventory management. While trading margins were lower, this ensured continuity of supply and protected customer relationships,” Shah said.

Looking beyond the furnace, PGP Glass flagged climate change as a growing operational risk in its first full set of disclosures under the new SLFRS S1 and S2 sustainability standards. Rising humidity levels increase the risk of surface defects — haziness or scum on stored bottles — driving up quality control and rework costs, while extreme weather events, including the recent Ditwah floods, have tested the company’s supply chain and warehousing; losses from the floods were fully covered by insurance.

To hedge against energy shocks and future carbon costs, PGP Glass has configured its furnace to run on either LPG or furnace oil, and expanded its rooftop solar capacity to 3.61 MW across its Horana and Ratmalana facilities. Solar power generation revenue, however, slipped to Rs. 44.3 million for the year from Rs. 66.5 million previously. Scope 1 and 2 greenhouse gas emissions came in at 46,719.6 tonnes of CO2 for the year, as the company works towards its parent group’s target of cutting absolute emissions by 50.4 percent by FY2032, against a FY2023 baseline.

With the upgraded furnace now back online, additional decoration capacity — including spray coating and decal application  in the pipeline, and Rs. With Rs. 1.14 billion of further capital commitments already on the books, PGP Glass is positioning for a return to export growth.