Financial Times

Haycarb compelled to import charcoal

Carbon manufacturer Haycarb PLC was compelled to import charcoal for production purposes in the first half of its 2008-09 year due to shortages here.

The company said this week that turnover grew by 13 % to Rs 2.2 billion in the same reviewing year, but continuing shortages of raw material slowed profit growth.

Haycarb, which has specialised activated carbon manufacturing operations in Sri Lanka, Thailand and Indonesia, said it also had to divert some orders to its overseas plants to counter rising local production costs.

As much as 40 % of its charcoal requirements in the six months ending September 30, 2008 were imported to feed local manufacturing operations and meet the demand for its products. Coupled with higher prices for local inputs, specifically raw materials, furnace oil and electricity, this resulted in the Group’s Cost of Sales growing 21 % to Rs 1.7 billion in the period reviewed, eroding margins and exerting pressure on bottom line indicators, the company press release said.

After tax profit, including gains from discontinued operations, was down 31 % to Rs 137.8 million, the company reported.

However, Haycarb Managing Director Ananda Hettiarachchy disclosed that since profit figures for the first half of the previous year had been boosted by a capital profit of Rs 66 million, the profit for the six months under review discounting this extraordinary gain, reflects a nominal improvement.

This was made possible partly by the company’s ability to reduce its finance costs by substantially reducing working capital, he said. In the six months reviewed, net finance costs declined by a significant Rs 53 million, a 98 % improvement over the first half of 2007-08, the report said.

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