Financial Times

Hayleys profit tops Rs 1 bln at 3Q, gets activated plant in Indonesia
The Hayleys conglomerate, which just reported a Rs 1.03 billion profit after tax for the nine months ending December 31, 2004, has acquired an activated carbon plant in Indonesia, and is going ahead with plans for another in the same country, as well as a rubberised coir plant in China.

"We've already taken on lease purchase an activated plant in Sulawesi, Indoensia which is operational," Hayleys chairman Rajan Yatawara told The Sunday Times FT. "We have the option of buying it in six months and are doing due diligence studies. We are hoping to put up another plant in Sumatra."

This would mean that the conglomerate's coconut shell charcoal-based activated carbon subsidiary, Haycarb, would eventually have five plants - one in Thailand, two in Indonesia and two in Sri Lanka.

Hayleys is also setting up a rubberised coir plant in China as a joint venture. "We're now trying to organise the land in China," Yatawara said. "We'll be supplying machinery from here and import fibre from here or from the joint venture we hope to set up in Indonesia for making fibre."

Haycarb has also struck a deal with Calgon Corporation of the US, a dominant player in the activated carbon industry, and through which it sells its products in the US.

"It is not in the form of an alliance but an exclusive purchase and supply agreement which would be almost like an alliance," Yatawara said. In results released to the Colombo Stock Exchange last week, the blue chip reported strong growth in turnover and pre and post tax profits at the end of the third quarter.

Hayleys said in a statement it expects strong performance for the year, despite the appreciation of the rupee against the US dollar in the final quarter. Group turnover grew 25 percent to Rs 13.9 billion and pre-tax profit was up 57 percent to Rs 1.3 billion, with profit attributable to shareholders up 56 percent to Rs 573 million.

Yatawara said these figures are consistent with the group's anticipated performance for the first three quarters of the year and reflect particularly significant growth in the rubber, transportation, inland marketing and plantations sectors.

The big increase in contribution from the transportation was partly from one of the container ships that Hayleys has acquired through its subsidiary Hayleyslines. Yatawara said prospects for shipping look good given strong charter and freight rates.

The acquisition of the second container vessel last year will positively impact future earnings for the group, along with activated carbon plants in Sulawesi and Sumatra and the new fibre extraction facility, also in Indonesia.

"The fourth quarter has historically seen the strongest growth for the group. We expect a strong performance this year as well," Yatawara said in the statement, commenting on the prospects for the year. However, the appreciation of the rupee against the dollar in January this year, will see the group falling short of a targeted Rs 1 billion in profit attributable to shareholders for the year, he cautioned.

Hayleys Dipped Products (DPL) Group subsidiary, comprising rubber glove manufacturing and marketing and plantations, has already reported an 81 percent growth in net profit for the period under review. The share of pre-tax profits from Group associates grew 22 percent to Rs 180 million, with associate companies in the textile, inland marketing and plantation sectors being notable contributors.

Yatawara also said that the Board of Directors of Hayleys Limited had recommended a bonus issue of 4:11, departing from the usual practice of issuing rights at a heavily discounted price. The bonus issue reflects an anticipation of dividends in line with the group's improved performance as well as the company's ability to service a higher level of capital in the future, he explained.

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