|
|
 |
 |
|||
|
|
(Reproduced from the Daily Mirror of November 23, 2001) Hayleys Ltd., one of Sri Lanka's leading diversified blue chips, has commendably managed to sustain its pre-tax profits at a hefty Rs. 534 million in the first half of 2001/2 financial year despite volatile local and global conditions. The current year's performance so far reflects only a marginal decline of 1% compared with a pre-tax profit of Rs. 539 million posted in the corresponding period of 2000/1 financial year.
Pre-tax profit is a good yardstick to measure performance since there is a surcharge on corporate income effective currently. As per provisional results released yesterday, Hayleys' profit from operations grew by 9% to Rs. 706 million but it was high finance costs, which was Rs. 195.3 million, up by 40% from last year, that affected the blue chip's profitability. Consolidated after-tax profit was Rs. 417 million, down by only 4% compared with Rs. 435.6 million in the first half of 2000/1 while profit attributable to ordinary shareholders dipped more sharply by 15% to Rs. 232.6 million. As at September 30, 2001, Hayleys was carrying forward a profit of Rs. 1.1 billion. The true strength of Hayleys is reflective from the growth in export turnover as against depressed national performance. During the first half of 2001/2, Hayleys group exports had increased by a healthy 14% to Rs. 3.6 billion on Free-On-Board basis whereas Sri Lanka's total exports upto September was down by 8%. In the first quarter, Hayleys' exports had amounted to Rs. 1.6 billion and end September 2001 data reflect value had increased by Rs. 2 billion. This was despite no real depreciation of the rupee in the second quarter while on the other hand lower exchange gains had an impact by way of the company increasing its finance cost. Due to a stagnant exchange rate, interest rates were relatively high upto September. The second quarter exports had to face the wrath of the shipping crisis as well. Hayleys' total Group turnover rose by 8% to Rs. 5.2 billion while gross profit improved by 14% to Rs. 1.7 billion. This commendable performance is on the back of the all time best results posted by the blue chip in 2000/1 when after-tax profit crossed the Rs. 1 billion mark and net profit amounted to Rs. 605.8 million. Hayleys Chairman Sunil Mendis in his statement accompanying interim results said that the principal contributors to the half-year's results were the Group's Coir, Environment, Rubber and Transportation sectors. Success in these sectors as well as exports could be attributed to Hayleys unwavering strategy of increasing capacity even in difficult times and its positive obsession to increase value addition. To cut cost it has been increasingly outsourcing productions for better profitability. Some of these sectors especially rubber gloves under the Dipped Products Group had done well despite competition from Malaysia, Indonesia and Thailand and exports of coir and agricultural products have weathered global recessionary impacts and competition in international markets with success. Haycarb, which had its best year in 2000/1, had suffered due to stiff competition from Indonesia and Philippines while the transportation sector had performed well though Colombo port activity had been affected in August and September. "Given the difficult internal and external conditions we are satisfied with our performance," Mr. Mendis told the Daily Mirror yesterday. Perhaps seeking greater excellence, Hayleys has also embarked on a key re-engineering exercise with regard to its Inland Marketing sector, which performed poorly with Hayleys Electronics Group, particularly, registering a substantial loss.
The restructuring includes the closure of Hayleys Docsolutions. It is expected that the action being taken will enable considerably stronger performance from the Inland Marketing sector in the years ahead, he said. "The Group remains optimistic about its performance for the year, despite the depressed conditions continuing at home and the troubling world scenario," Hayleys Chief added. Analysts said that the third quarter of 2001/2 should be relatively better given the fact that interest rates have declined and the exchange rate has begun to depreciate. "At least on the financing cost aspect there should be some gain," they added. The Group has also sustained its export activity with the regular orders in place so far. Restructuring in the import trading activities should give some room for further cost reduction as well, whilst increasing prospects for greater shareholder and other stakeholder value in the medium term. During the first half of 2001/2, Hayleys Ltd., together with Hayleys Engineering Ltd., have invested Rs. 232 million in AES Kelanitissa Ltd., and is classified under "Other-Long term Investments" in the Balance Sheet as at September 30, 2001, which stood at Rs. 612.4 million. The power project, one of the biggest private sector infrastructure ventures in the country worth over US $ 100 million, is in partnership with global giant AES. Stock market investors yesterday reacted positively to Hayleys commendable performance. Its price gained by Rs. 1.75 to close at Rs. 84.75, which is much above the first half's highest price of Rs. 79, though lower compared with the previous first half's high of Rs. 110.25. Last year Hayleys paid a dividend of 35% while its net asset per share as at September 30, 2001 was Rs. 126.09 compared with Rs. 114.18 a year earlier after being adjusted for the Rights Issue. Several group companies also fared well in the market yesterday. Hayleys Exports moved up by Rs. 4 to Rs. 40, DIMO by Rs. 2 to close at Rs. 38 and Dipped Products moved up by 25 cents to close at Rs. 50.75. First half highlights During the first half of 2001/2, the Hayleys group exports had increased by a healthy 14% to Rs. 3.6 billion on Free-On-Board basis whereas Sri Lanka's total exports upto September were down by 8%. In the second quarter there had not been any significant depreciation of the Rupee. The principal contributors to the half-year's results were the Group's Coir, Environment, Rubber and Transportation sectors. The Hayleys unwavering strategy of increasing capacity even in difficult times and its positive obsession to increase value addition, improving productivity have proved beneficial. Has embarked on a key re-engineering exericise with regard to its Inland Marketing sector, which performed poorly with Hayleys Electronics Group, particularly, registering a substantial loss. Inland marketing activity is being restructured and re-grouped as "Consumer," "Agro" and "Industrial Solutions" for sharper focus on markets and optimal use of resources. Consolidated after-tax profit was Rs. 417 million, down by only 4% compared with Rs. 435.6 million in the first half of 2000/1 while profit attributable to ordinary shareholders dipped more sharply by 15% to Rs. 232.6 million. As at September 30, 2001, Hayleys was carrying forward a profit of Rs. 1.1 billion. During the first half of 2001/2, Hayleys Ltd., together with Hayleys Engineering Ltd., have invested Rs. 232 million in AES Kelanitissa Ltd., one of the largest private sector power projects with global giant AES of US. Stock market investors yesterday reacted positively to Hayleys commendable performance. Its price gained by Rs. 1.75 to close at Rs. 84.75, which is much above the first half's highest price of Rs. 79, though low compared with previous first half's high of Rs. 110.25. The Group remains optimistic about its performance for the year, despite the depressed conditions continuing at home and the troubling world scenario.
|
|
Coir
sector is one of Hayleys Group's star performers despite global
competition and recession.
Contact
Information: Send mail to