Overseas operations help Haycarb

Haycarb PLC. the Hayleys Group's globally-dominant activated carbon manufacturing business has reported turnover growth of 13 per cent to Rs. 2.2 billion in the first half of 2008-09, but continuing shortages of raw material have slowed profit growth, the multinational reported this week.

Comprising specialised activated carbon manufacturing operations in Sri Lanka, Thailand and Indonesia, Haycarb was compelled to import charcoal for its manufacturing in Sri Lanka and to divert some orders to its overseas plants to counter rising local production costs, the company said this week.

As much as 40 per cent of its charcoal requirements in the six months ending September 30, 2008 were imported to feed local manufacturing operations and meet the demand for its products.

Coupled with higher prices for local inputs, specifically raw materials, furnace oil and electricity, this resulted in the Group's Cost of Sales growing 21 per cent to Rs. 1.7 billion in the period reviewed, eroding margins and exerting pressure on bottom line indicators, the company said.

In results released to the Colombo Stock Exchange profit before tax at Rs. 146.3 million had declined 35 per cent from the Rs. 226 million achieved in the corresponding six months of the previous year.

Profit after tax, including gains from discontinued operations, was down 31 per cent to Rs. 137.8 million.

However, Haycarb Managing Director Ananda Hettiarachchy disclosed that since profit figures for the first half of the previous year had been boosted by a capital profit of Rs 66 million, the profit for the six months under review discounting this extraordinary gain, reflects a nominal improvement.

This was made possible partly by the company's ability to reduce its finance costs by substantially reducing working capital, he said.

In the six months reviewed, net finance costs declined by a significant Rs 53 million, a 98 per cent improvement over the first half of 2007-08.