Sri Lanka’s Hayleys Group declares record profit in first six months of the year
Sri Lanka’s Hayleys Group has reportedly delivered a record profit in the first six months of FY 2020/21, with pre-tax profit nearly tripling to Rs. 5.52 billion compared to the corresponding period of last year.
The period under review reflects the strongest six months performance in the Group’s operating history and is underpinned by solid improvements in the core performance of the Group’s export-oriented businesses and proactive efforts on driving cost efficiencies through the ‘Haysmart’ programme, the Daily FT has reported.
Despite numerous challenges stemming from the outbreak of the COVID-19 pandemic, the Group ensured continuity of its businesses while operating under strict guidelines of the relevant authorities and ensuring continued value creation to its employees, suppliers, and other stakeholders, the news report has stated.
Accordingly, earnings before interest, tax, depreciation, and amortisation (EBITDA) recorded strong growth of 38% to Rs. 13.32 billion. Improved profitability in the Purification and Hand Protection sectors was underpinned by capacity expansions, better product mix, effective supply chain management and ongoing cost efficiencies.
The Group’s Consumer and Retail business has recorded a growth, supported by an aggressive sales drive and ongoing cost efficiencies. The Agriculture and Textiles sectors has also delivered strong performances, while the Plantation sector’s profitability was upheld by significant growth in the tea exports arm.
Understandably, the Leisure sector has continued to be in the red and proactive measures have been implemented to reduce overheads and optimise resource utilisation.
Consolidated Earnings before Interest and Tax (EBIT) has reportedly increased by 39% to Rs. 9.83 billion during the year.
According to the report, overall profitability was also supported by a near 15% decline in finance costs, as the Group successfully negotiated favourable terms with banks to maximise the benefit of reductions in market interest rates. Resultantly, the Group’s pre-tax profit more than tripled to Rs.5.52 billion while profit after tax amounted to Rs. 3.82 billion compared to Rs. 640.86 million the previous year. Revenue in the first half grew by 1% to Rs. 106.9 billion.
“We anticipate our export-oriented businesses to maintain the current growth momentum and are confident of delivering significant earnings growth in the ensuing quarters,” Hayleys PLC Chairman and Chief Executive Mohan Pandithage has been quoted as saying.
He has added, “Managing our supply side along with our passionate, dedicated and disciplined workforce ensured we delivered in this very challenging environment. We are also mindful of the risks arising from the recent resurgence in COVID-19 infections and will continue to adhere to stringent health and safety guidelines as prescribed by relevant health authorities.”
OSL take: The profit recorded by a Sri Lankan group despite internal/external challenges due to the global Covid 19 pandemic is indicative of the growth and strength of Sri Lanka’s private sector. Sri Lanka’s geographical positioning in the Indian Ocean, ease of doing business environment and the many trade agreements as well as trade concessions enjoyed by the country have made it a business hub in the South Asian region. Foreign businesses/investors could confidently explore business/investment opportunities in Sri Lanka as well as look at forming partnerships/joint ventures with local companies
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