Business Times

Haycarb posts post-tax profit of Rs 574 mln for 2010-11

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 31st March 2011, citing it has a period of challenge as a result of worsening raw material shortages, the company said. 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 %t increase in revenue. However shortages of coconut shell charcoal and the consequent higher prices, saw cost of sales increase by 34 % 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 31st March 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 %. 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.

“In this regard, the urgent attention of the policymakers and relevant authorities to devise a long term strategic framework to protect and grow the coconut plantations and its high value adding industries like activated carbon is of paramount national interest,” Mr. Kariyawasan said in the press release.
He noted that significant appreciation of Asian currencies against the US Dollar, increases in oil prices, the continued pressure on labour costs and higher freight charges were among the other adverse factors that impacted on margins.

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