Haycarb June profits hit by charcoal shortage

Hayleys group’s coconut-shell based activated carbon manufacturer, Haycarb PLC, saw its June quarter (1Q19) earnings declining amid shortages and price escalations of coconut shell-based charcoal, the key raw material the firm operates with.

The earnings for the quarter under review fell 6 percent year-on-year (YoY) to Rs.101 million on revenue of Rs.4.3 billion, up 31 percent. The cost of sales also rose at a similar percentage to Rs.3.5 billion. The earnings per share (EPS) for the period deteriorated to Rs.3.40 from Rs.3.62.

 The operating profit of company fell 51 percent YoY to Rs.242.4 million.  

Haycarb is the pioneer manufacturer of coconut shell activated carbon with manufacturing facilities in Sri Lanka, Thailand and Indonesia supported by marketing offices in the USA, UK and Australia. Haycarb Managing Director Rajitha Kariyawasan said although the company’s initiatives to extend its market reach and the value added portfolio contributed to the noteworthy growth in turnover, the continuing shortages and escalation of charcoal cost in Sri Lanka and India negatively impacted the profitability at both the company and group levels.

 “Even though coconut crop and charcoal supply chain dynamics stabilised in Indonesia, shortages in coconut shell based charcoal supplies are expected to continue in Sri Lanka, India and Thailand in the short term. 

“In this backdrop, the company is continuing to focus on the procurement strategy that emphasizes on retention of existing suppliers, broad basing the supply network and supporting low-cost environmental friendly charcoaling methods,” Kariyawasan said. 

On a separate note, he said that the growth in Haycarb’s environmental engineering arm Puritas (Pvt.) Ltd. is expected to contribute positively to the profitability of the group supported by the expected growth in water and waste water treatment projects in Sri Lanka and in the region.

In the background of increasing emphasis on environmental sustainability worldwide, Haycarb remains positive in its medium to long term outlook in its activated carbon and water treatment system businesses.

Haycarb was recently awarded a US $ 56.2 million project to install sewage wastewater removal networks by the Maldivian state utility Fenaka Corporation.
As at June 30, 2018, Hayleys PLC held a 67.73 percent stake in Haycarb while the Employees’ Provident Fund, the state-controlled private sector pension fund, held a 4.77 percent stake being the second largest shareholder.