High charcoal prices and a stronger rupee have squeezed margins at Sri Lankan activated carbon manufacturer Haycarb, cutting December 2010 quarter net profit by 28 percent to 89 million rupees, a statement said.
Sales of coconut shell-based activated carbon in the period rose 37 percent to 1.6 billion rupees from a year ago while earnings per share fell to three rupees from 4.19 rupees.
" . . . net profit of Haycarb’s Sri Lankan operations for the third quarter reflected a decline of 17 percent over the corresponding quarter, principally as a result of higher charcoal prices and the appreciation of the local currency against the US Dollar," the statement said.
"Due to the acute shortage of charcoal locally, the company was compelled to import 55 percent of its total requirement."
Lower coconut production in the island has created a shortage of nuts sending prices shooting up to record highs in recent months.
Net profit for the nine months ending December 31, 2010 at Haycarb, a unit of the Hayleys conglomerate, was flat at 394 million rupees although sales rose 27 percent to 4.7 billion rupees.
"The continuing increase of charcoal purchase prices could not be passed on to customers, and exerted significant pressure on our bottom line," Haycarb managing director Rajitha Kariyawasan said.
"However, the strong performance of overseas subsidiaries, maximization of throughput and our focus on value added products enabled the company to mitigate this exposure to some extent."
The "significant appreciation" of local currencies in Indonesia and Thailand against the US dollar and an increase of furnace oil cost in Sri Lanka also contributed to a reduction in the gross margin of the group, he added.
There was "strong demand" for activated carbon and maximum factory capacity utilization in the nine months reviewed, the statement said.
Haycarb group has manufacturing plants in Sri Lanka, Thailand and Indonesia with marketing offices in the UK, Australia and USA.
LBO
Sales of coconut shell-based activated carbon in the period rose 37 percent to 1.6 billion rupees from a year ago while earnings per share fell to three rupees from 4.19 rupees.
" . . . net profit of Haycarb’s Sri Lankan operations for the third quarter reflected a decline of 17 percent over the corresponding quarter, principally as a result of higher charcoal prices and the appreciation of the local currency against the US Dollar," the statement said.
"Due to the acute shortage of charcoal locally, the company was compelled to import 55 percent of its total requirement."
Lower coconut production in the island has created a shortage of nuts sending prices shooting up to record highs in recent months.
Net profit for the nine months ending December 31, 2010 at Haycarb, a unit of the Hayleys conglomerate, was flat at 394 million rupees although sales rose 27 percent to 4.7 billion rupees.
"The continuing increase of charcoal purchase prices could not be passed on to customers, and exerted significant pressure on our bottom line," Haycarb managing director Rajitha Kariyawasan said.
"However, the strong performance of overseas subsidiaries, maximization of throughput and our focus on value added products enabled the company to mitigate this exposure to some extent."
The "significant appreciation" of local currencies in Indonesia and Thailand against the US dollar and an increase of furnace oil cost in Sri Lanka also contributed to a reduction in the gross margin of the group, he added.
There was "strong demand" for activated carbon and maximum factory capacity utilization in the nine months reviewed, the statement said.
Haycarb group has manufacturing plants in Sri Lanka, Thailand and Indonesia with marketing offices in the UK, Australia and USA.
LBO
