(PRESS RELEASE) – Hayleys Group said that despite improved revenue, it was a challenging quarter for the group, during which Profits Before Tax (PBT) contracted 61 percent YoY down to 407.7 million rupees.
“Despite lower profits during the first quarter, we remain confident that group profits will rebound over the coming quarters as multiple strategic investments made over the recent past begin to generate returns and contribute positively towards group profitability,” Mohan Pandithage, chairman and chief executive of Hayleys said.
“In particular, we note with satisfaction the consistently positive growth displayed by our transportation and logistics segment, represented by Hayleys Advantis, and the positive turnaround recorded within the plantations sector as a result of favourable market conditions.”
Profit has also been impacted by an increase in the group’s net finance cost, which rose by 37 percent YoY to 875.6 million rupees in 1Q18, mainly due to an increase in market rates and the higher level of investment from the group in key business segments with a view to enhancing growth potential over the medium to long term.
However, backed by a stronger performance of its transportation and logistics sector, the Group said it recorded a 21 percent Year-on-Year (YoY) improvement in topline up to 29.2 billion rupees during the three months up to 30 June 2017 (1QFY18).
“The group’s transportation and logistics segment generated revenue of Rs. 7.24 billion during the quarter. Operating Profits during the quarter rose to Rs. 430.9 million,” it said.
Turnover in the plantation sector increased to 3.49 billion rupees in 1Q18 while operating profits improved to 99.4 million rupees on the back of stronger tea prices at the Colombo Tea Auction during the period under review.
Notably, following the completion of one of Sri Lanka’s largest solar power plants in Welikande, the group’s power and energy sector also recorded notable improvements in top and bottom line performance, generating 404.9 million rupees in revenue, while operating profits within the segment rose to 229.5 million rupees.
Adverse weather conditions negatively impacted the performance of the group’s agriculture segment, which recorded a contraction in revenue of 2.54 billion rupees in 1Q18. This notable drop in production resulted in operating profits dropping to 83.3 million rupees.
The group’s Hand Protection and Purification sectors’ profitability were affected by a steep increase in raw material prices as operating profits declined to 38.9 million rupees and 160.9 million rupees respectively.
The group’s leisure sector was able to maintain relatively stable revenues to close the quarter at 1.1 billion rupees.
However, the sector’s ability to generate profits was hampered due to the substantial refurbishments being carried out at Kudarah Island Resort in the Maldives.
The segment completed the quarter with an operating loss of 106.9 million rupees.
“However, with refurbishments having since been completed just prior to the end of 1Q18, the group anticipates significant improvements in profitability moving forward.”