Hayleys turnover Rs 32.4b in ’08-09

Post tax profit Rs 803 million:

Commendable performances by businesses in Global Markets and Manufacturing and Agri Inputs have helped Sri Lanka’s Hayleys PLC to weather hostile economic conditions in 2008-09.

The Group reported that consolidated turnover for the 12 months ending March 31, 2009 had grown nearly 5 percent to Rs 32.4 billion.

However, the multi-national blue chip’s high degree of exposure to export markets placed many of its businesses directly in the path of decelerating international trade and finance flows, declining industrial production and softening consumer demand in the year reviewed.

These pressures, combined with an unfavourable domestic policy environment, significantly impacted on Group profits.

Releasing its results for the year to the Colombo Stock Exchange this week, Hayleys PLC reported that profit before tax had declined 26 percent to Rs 1,475 million. Profit after tax and losses from discontinued operations at Rs 803 million reflected a drop of 26 percent, and profit attributable to equity holders of the company was down 31 percent to Rs 311 million.

The Group reduced the impact of discontinued operations, principally the Consumer Durables business to Rs 100 million from Rs 431 million in 2007-08. There will be no carry-over of losses from Consumer Durables beyond March 31, 2009.

Among the major contributors to Group performance with improved performances in the year under review were Hand Protection with Rs 9,463 million turnover and Rs 312 million profit, Purification Products with Rs 4,504 million turnover and Rs 406 million profit and Agri Inputs with Rs 3,678 million turnover and Rs 213 million profit.

Transportation with Rs 3,800 million turnover and Rs 429 million profit and Plantations with Rs 2,433 million turnover and Rs 320 million profit also made significant contributions, although their performances were below those of the previous year.

Hayleys Group Chairman N. G. Wickremeratne said, “Hayleys, like no other public quoted company, is exposed to global trade as our Manufacturing and Plantation businesses account for over 60 percent of revenues. We have continuously drawn attention to the fact that these businesses are hugely affected and their profitability eroded when there is no adjustment for inflation in the exchange rate and we suffer appreciation of the rupee in real terms.”

“We witnessed a further deterioration on this score which was relieved in part only recently. In our estimation we have lost 5-7 percentage points off our margin in our different businesses since 2005, even after achieving cost reductions and productivity improvements that have been essential survival measures.”

He said Hand Protection was one of the most affected by the global slowdown, with order levels declining sharply and customer demands for lower prices.

“However, the resilience and stability of the business has been amply demonstrated by the results returned this year,” Wickremeratne said, adding that low rubber prices in the last quarter as well as the improvement in exchange rate competitiveness had helped performance.

DPL Thailand, the Group’s medical glove production unit, has achieved profitability after a prolonged struggle to rectify equipment related problems. “DPTL has performed strongly from November up and is now a significant contributor to the Hand Protection sector’s success: again, a testament to our capacity to transfer our expertise to overseas locations,” Wickremeratne said.