Hayleys Group has turned in a strong 6-month performance for the period ending September 30, 2009 with a sharp rise in profits and is eyeing the post-conflict opportunities in key sectors of the economy.
“The interim result provides optimism for the Group’s outlook for the ensuing half of the year. Our focus is clearly on garnering the many new post-war opportunities within Sri Lanka in the fields of Agriculture,
Transportation, Logistics and Tourism, while other businesses will continue to explore avenues of expansion locally and overseas,” said Mohan Pandithage, Group Chairman and Chief Executive in a statement to shareholders.
Powerful businessman Dhammika Perera, also chairman of the Board of Investment, is the Group’s biggest single shareholder among the top five stakeholders with 21.43 % control, followed by Trustees of the D.S. Jayasundera Trust (11.60%), Trustees of the Hayleys PLC-Employees Share Trust (9.14%), Sri Lanka Insurance Life Fund (6.2%) and Dipped Products (4.71%). The two trusts, among the top five, were launched some years back to ward off any takeover bid.
Mr Pandithage said profits, available to shareholders, was Rs. 553 million a five-fold increase over the first half of last year. Operating profits increased by 25% to Rs. 1,465 million, with a Group turnover of Rs. 17 billion.
He said the global markets and manufacturing sector continued their robust performance despite the effects of the global recession, due to greater efficiencies and lower input costs in some units and a strong focus on value added products in others. Both local and overseas operations of hand protection and purification products generated strong results while the fibre sector recovered from a loss situationto achieve a profit during the half year. “Despite the many challenges facing the apparel industry and providers of input to this sector, our Textiles unit has performed strongly too,” the CEO said, in unaudited accounts released to the stock market through the Colombo Stock Exchange.
The company said the Plantation sector, which had outstanding results last year, was already affected this year by a drop in commodity prices and demand as well as declines in crop yield caused by unfavourable weather conditions. The sector received another setback in the form of a near 40% wage increase to plantation employees. As a result, pre-tax profits reduced by more than Rs. 250 million in the second quarter alone, inclusive of the estimated increase in retiring gratuity liability.
“Transportation results remain impacted by the decline in global trade and shipping volumes. However, we have seen recent signs of a recovery in both freight rates and cargo shipped,” the CEO’s statement said. He also spoke of the Group divesting its interests in Royal Heritage Hotel (the owning company of Vil Uyana) and Seashells Hotel during the half year. The holding in Hayleys MGT Knitting Mills was increased to acquire a controlling interest in the business.