Haycarb posts Rs 574 m profit

Haycarb PLC, the Hayleys Group's multi-national activated carbon manufacturing business, has reported turnover of Rs 6.4 billion and profit before tax of Rs 724 million for the year ending March 31, 2011, a period of challenge as a result of worsening raw material shortages.

Haycarb PLC chairman A. M. Pandithage

The continuing strong demand for activated carbon and a greater focus by the company on value addition had enabled it to increase sales volumes resulting in a 26 per cent increase in revenue.

However shortages of coconut shell charcoal and the consequent higher prices, saw cost of sales increase by 34 per cent over the 12 months.

As a result, Haycarb's gross margins contracted significantly, exerting pressure on profit. Haycarb reported after tax profits of Rs 574 million and attributable profit of Rs 505 million, for the 12 months ending March 31, 2011.

"The biggest challenge for Haycarb is the scarcity and very high prices of coconut shell charcoal, which has become a world-wide issue, now extending to Sri Lanka, India, Thailand, Indonesia, Philippines and Vietnam," Haycarb's Managing Director Rajitha Kariyawasan said.

The most affected location has been Haycarb's largest manufacturing base in Sri Lanka where the annual point-to-point increase in the price of coconut shell charcoal was in the region of 50 per cent.

The significant drop in coconut crops, increasing domestic consumption and the widening gap between charcoal supplies and installed activated carbon capacity in Sri Lanka has compelled Haycarb to increase its imports of charcoal year on year.