Financial Times

Hayleys does well despite "difficult year"

The Hayleys conglomerate increased pre-tax profit by 23 percent to Rs. 1.3 billion for the year ended March 31, 2003, in what chairman Sunil Mendis described as a "difficult year."

The main contributors to Group performance came from the rubber gloves subsidiary, Dipped Products Ltd, its activated carbon unit, Haycarb and its coir and maritime businesses.

Total gross turnover of the company, which celebrates its 125th year this year, rose by 15 percent to Rs. 12.5 billion.

Tax holidays and concessions enjoyed by some of the Group's export businesses reduced the conglomerate's tax burden.

Mendis said the company remains concerned about labour laws that inhibit the competitiveness of local industry.

Changes were required in laws governing permanent employment, termination of employment and lay-offs, "which remain both cumbersome and costly", and holiday patterns and leave entitlements, he said.

Mendis said the Group had to cope with a "drastically" reduced coconut crop, which affected the coir and environment businesses, and higher energy costs.

However, he said the coir sector made a "substantial" profit despite the shortage and high price of coir.

Haycarb's performance was helped by the strong performance of its Thai associate Carbokarn but the company was forced to import charcoal from India, Thailand and Vietnam for its local operation.

Profitability of the plantations sector was "severely dented" by higher energy and wage costs, Mendis said.

Although Hayleys accounts for over five percent of the island's tea production, "profitability is still marginal and cyclic".

The consumer goods section returned to profitability from the large loss of the previous year while subsidiary Dimo exited from the lubricants business in which it incurred losses.