Haycarb posts Rs 217 m net profit in 1Q

Haycarb PLC has made a solid start to 2012-13 with the expansion of the company's value-added carbon portfolio generating revenue and profit growth in the first quarter of the year.

In results released to the Colombo Stock Exchange, the Hayleys Group's activated carbon manufacturer, Haycarb, reported that revenue grew to Rs 2.7 billion in the three months ending June 30, 2012, while profit before tax improved to Rs 259.8 million. Net profit recorded for the quarter was Rs 217 million, of which profit attributable to equity holders of the company was Rs 179 million.

Haycarb PLC Managing Director, Rajitha Kariyawasan said the company had increased its value-added carbon segment and run factories at full capacity in the period under review.

"The decrease in charcoal prices in Sri Lanka and Indonesia had also helped temporarily to improve margins. However, the benefit of the reduced charcoal prices had been passed on to customers, and the raw material prices could move up when major producers such as India, Indonesia, Philippines and Sri Lanka move into the lean production season, Kariyawasan said, adding "Haycarb will continue its strategy of investing in charcoal inventory with significant funding in working capital to ensure supply security and building stable relationships with the supply chain.

"The continuing economic slowdown and stagnation in our European, Japanese and US markets will also result in a drop in demand for certain types of carbon," he said. "Therefore, we have to be cautious in the months ahead." A significant increase in cost due to last year's sharp oil price revision and substantial increase in labour cost and overheads will also impact on margins, he said. If the Sri Lanka Rupee and other Asian currencies stabilise at or below current levels, the company would be able to mitigate these impacts.

"Our plans for capacity expansion and further value additions, coupled with geographic market expansion are expected to achieve the growth targets set by the company," Kariyawasan said.