Business Times

Lanka Walltiles profits up 30% despite Rs. 216 mln VRS

Tile maker Lanka Walltiles recently released its third quarter 2010/11 results in which it showed a 13.7% year-on-year bump in group turnover to Rs. 6.44 billion for the nine months to end-December 2010. Additionally, after tax group profits for the same period showed an increase of 29.8% year-on-year to Rs. 565.10 million.

Financials also indicated a year-on- year increase of Rs. 113.22 million in group turnover to Rs. 2.32 billion for the three months to end-December 2010, while group after tax profits for the same period virtually doubled to Rs. 410.25 million in 2010, from Rs. 279.22 million in 2009, according to a company statement.

This is despite Lanka Walltiles having to compensate 447 workers at its recently closed Balangoda tile factory, a part of a voluntary retirement scheme (VRS) which cost the entity Rs. 216 million. Further, also indicated in the most recent financials was the September 2010 shutdown of its wood floor manufacturing subsidiary Parquet Ceylon. An undertaking which resulted in a net loss of Rs. 16.29 million for the group, this even after a contract was signed for the sale of machinery and spares for the sum of Rs. 15 million plus tax.

This at a time when media say as much as Rs. 700 million may be pumped into the group's Meepe tile factory. A proposition possibly backed up by significant new capital expenditures in the cash-flows statement including more than double property, plant an equipment acquisitions, to Rs. 467.75 million, and a Rs. 132.76 million increase in capital work in progress.

Further, the unaudited balance sheet for the nine months to end-December 2010 showed the "Interest bearing liabilities" line item had risen significantly to Rs. 1.12 billion from the audited amount of Rs. 655.31 million recorded as at end-March 2010.

Meanwhile, segmental information indicated that group turnover in the tiles business had increased by 9.3% in 2010, while plantations earnings had risen by 9.1%. However, it was the Lanka Walltiles' packaging arm that saw the sharpest gains in group turnver, increasing 38.7% from the year before. On the other hand, plantations made more for Lanka Walltiles, in terms of group profits before tax, as this business unit showed a 327.6% increase to Rs. 179.39 million, while other segments remained virtually stagnant (tiles) or even saw some losses (packaging).

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