Hayleys net profit up 6% to Rs.629.14mn in 2Q

Diversified conglomerate Hayleys PLC posted a net profit of Rs.629.14 million for the second quarter ended September (2Q16), increasing 6 percent year-on-year (YOY) supported by the transport and logistics, agriculture and purification product segments.

Basic earnings per share increased to Rs.8.39 from Rs.7.89 YOY.

Revenue fell 4 percent YOY to Rs.22 billion, while cost of sales fell 6 percent YOY to Rs.16.50 billion, leading to a gross profit increase of 5 percent YOY to Rs.5.49 billion.

Distribution expenses increased 5 percent YOY to Rs.728.97 million despite a fall in oil prices, while administrative expenses increased 12 percent YOY to Rs.2.84 billion. Net finance costs increased 18 percent YOY to Rs.584.58 million.

Total assets increased to Rs.94.76 billion from Rs.94.24 billion in 1Q16, while the equity of the parent increased to Rs.29.87 billion from Rs.29.16 billion through an increase in revenue reserves for the same period.

Total long and short-term interest-bearing borrowings increased to Rs.30.43 billion in 2Q16 from Rs.29.15 billion in 1Q16.

Net profits for the first half of 2016 (1H16) increased 20 percent YOY to Rs.1.15 billion, with revenue falling 3 percent YOY to Rs.44.02 billion and cost of sales improving 6 percent YOY to Rs.33.44 billion.

In a segmental breakdown of performance in 1H16, transports and logistics performed the best with revenue rising 3.39 percent YOY to Rs.7.33 billion and operating profits increasing 41.34 percent YOY to Rs.750.20 million through an increase in the existing and new business lines.

Leisure and aviation revenue increased 5.53 percent YOY to Rs.2.48 billion and operating profits increased 20.57 percent YOY to Rs.416.82 million.

Under manufacturing, purification products revenue rose 5.96 percent YOY to Rs.5.51 billion, with operating profits increasing 31.44 percent YOY to Rs.530.01 million through increased demand.

In the hand protection segment, which manufactures hand gloves, revenue fell 14.15 percent YOY to Rs.6.19 billion and operating profits fell 53.54 percent YOY to Rs.356.16 million, possibly due to the non-availability and price fall in natural rubber in the country.

Textiles revenue increased 1.89 percent YOY to Rs.4.32 billion and operating profits increased 66.76 percent YOY to Rs.213.88 million after a segment restructuring process, and fibre revenue fell 13.97 percent YOY to Rs.1.97 billion with operating profits falling 26.56 percent YOY to Rs.71.04 million.

Construction material production revenue rose 24.16 percent YOY to Rs.1.85 billion and operating profits rose 16.51 percent YOY to Rs.287.92 million, reflecting the continuing construction drive in the country.

Agriculture revenue increased 53.72 percent YOY to Rs.4.75 billion with operating profits rising 47.34 percent YOY to Rs.454.78 million as the group diversified into new crops with export potential such as seaweed.

However, in plantations, which account for tea and rubber production, revenue dove down 39.92 percent YOY to Rs.4.71 billion resulting in an operating loss of Rs.54.84 million, declining 121.04 percent YOY due to a fall in global tea and rubber prices.

In the power and energy segment, which accounts for industrial inputs and power generation, revenue increased 9.76 percent YOY to Rs.1.93 billion and operating profits rose marginally 0.01 percent YOY to Rs.615.19 million, as mini hydropower performed poorly during the period.

Consumer products revenue increased just 6.72 percent YOY to Rs.2.70 billion despite the country’s consumption boom, with operating profits falling 14.78 percent YOY to Rs.65.71 million. Investments and services revenue fell 24.14 percent YOY to Rs.266.30 million, while operating profits rose 2.98 percent YOY to Rs.498.26 million.

The group will have to pay Rs.939.7 million under the super gain tax for 3Q16.

Business magnate Dhammika Perera owns 46.8 percent of the shares in Hayleys directly. The trustees of the D.S. Jayasundera Trust own 11.6 percent of the shares and the Employees’ Provident Fund (EPF) owns another 5.05 percent.