Hayleys pre-tax profit grows 8% to Rs 1.6 billion

The Hayleys Group, Sri Lanka's predominantly manufacturing and agriculture oriented multinational conglomerate has reported modest growth in pre and post tax profits for the year ended March 31, 2007, with strong performances in key sectors undermined by setbacks in two areas of business.

In results released to the Colombo Stock Exchange, the blue chip thrice adjudged Sri Lanka's best corporate citizen reported profit before tax of Rs. 1,608 million, up 8 per cent over the previous year, on a consolidated turnover of Rs. 27.6 billion, which represented a growth of 15 per cent.

Profit after tax at Rs. 1,089 million was up 11 per cent, but profit attributable to equity holders of the company fell 9 per cent to Rs. 534 million.

Chief among the major positive contributors to Hayleys' performance in the year under review were Dipped Products Ltd., (DPL) whose Hand Protection and Plantations businesses contributed a turnover of Rs. 9,413 million to turnover and Rs. 742 million to profit, and the Transportation sector represented by Hayleys Advantis with Rs. 3,160 million to turnover and Rs. 495 million to pretax profit.

The Textiles business of Hayleys MGT Knitting Mills also produced good results with a creditable gain in profitability, contributing Rs. 190 million to profit while the Purification Products business did well to reverse the loss of Rs. 149 million incurred in the previous year and make a pre tax profit of Rs. 104 million.

The positive impact of these solid performances on the Group's bottom line was reduced by adverse situations in two areas. The first was the failure of Onril in the Fibre sector, a new joint venture.

A spokesman for the Group said the problems in this company, in which Hayleys held 49 per cent of the equity, arose from irreconcilable differences that emerged as to the cost and pricing of the joint venture's production.

The deterioration of the relationship of the joint venture partners has compelled the Group to sever connections with the joint venture partners as well as with Onril including the resignation of its nominees on the Board of Directors of Onril. Hayleys has also taken some of the issues with this company to court.