Sri Lanka’s Haycarb profit margins pressed by downturn in gold mining industry

Haycarb

Aug 04, 2015 (LBO) – Sri Lankan coconut shell-based activated carbon manufacture Haycarb’s June 2015 quarter profits rose 4 percent to 135 million rupees from 130 million rupees last year, the interim accounts filed with the stock exchange revealed.

Haycarb PLC Managing Director Rajitha Kariyawasan said that the downturn in the gold mining industry coupled with significant depreciation of currencies in key markets of Europe, Japan and Australia have posed a significant strain to protect margins.

He added that the low cost competition from smaller manufacturers in 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.

The group revenue rose 20 percent to 2,911 million rupees in the same quarter.

Cost of sales increased 17 percent to 2,253 million rupees in June 2015 quarter which resulted in a 31 percent boost to the group’s gross profit, accounts showed.

The group reported a 16 percent increase to 30 million rupees in selling and distribution expenses in the June quarter 2015 compared to the same quarter last year.

The firm, a subsidiary of the Hayleys conglomerate, said basic earnings per share for the quarter increased to 4.55 rupees from 4.40 rupees the previous year.

In the financial year ending June 30, 2015, Haycarb’s group net profit was up 34 percent to 190 million rupees.

Haycarb says, against this back drop, the 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 significant thrust is made to increase our direct marketing presence in the USA, through our new structure at Haycarb USA,” Kariyawasan said.

Kariyawasan further added that growth in its environmental engineering arm Puritas (Pvt.) Ltd. is expected to contribute more to the profitability of the Group.

However Kariyawasan stated that the company remained positive of its outlook in the medium to long term, given its strength and position in the industry as a leading manufacturer of high quality carbon and provider of purification solutions whilst leveraging on the growth potential of the activated carbon industry against the backdrop of increasing emphasis on environmental sustainability worldwide.