Hayleys Fabric losses expand in March over higher costs, tax charge

Hayleys Fabric PLC’s problems persisted in controlling direct costs and overheads as the knit fabric maker expanded losses during the quarter ended in March 2018 while the top line grew. 

The Hayleys group entity lost 41 cents a share or Rs.84.5 million in the January – March quarter (4Q18) from a loss of Rs.2.0 million during the corresponding quarter in the same period last year. 

The company earned a before-tax profit of Rs.13.5 million for the quarter from a loss of Rs.21 million but the heavy tax charge of close to Rs.100 million for the period swung the company into a net loss. 

The tax charge for the corresponding period was just Rs.19 million. 

The top line rose by 19 percent year-on-year to Rs.2.4 billion, but the direct costs also followed closely growing by a similar percentage to Rs.1.8 billion. 
The gross profit was Rs.267.5 million, up 24 percent YoY. 

The administrative expenses rose by 9.0 YoY percent to Rs.205.3 million.

Hayleys Fabric reports financial performance and position in United States dollars – its functional currency – as the company’s dealings mainly happen in dollars and are later translated into Sri Lankan rupees. 

In dollar terms, the company reported a loss of US $ 543,143, up from a loss of US $ 16,909 in the earlier period.  

The sales were US $ 15.3 million, up 17 percent over the same period last year. 

Hayleys Fabric is a major supplier to the textile industry and delivers 2.5 million metres of fabric each month to apparel manufacturers from the factory located in Narthupana Estate, Neboda in the Western Province.    

The company, which was formerly known as Hayleys MGT Knitting Mills PLC and rebranded in July 2015 as Hayleys Fabric PLC, offers end-to-end solutions from design, development, printing, brushing and sueding of pure and blended polyester and cotton fabrics. 

In May last year, the company’s manufacturing process came to a halt for about two weeks due to floods and the production was also disturbed due to the houses of most of the employees being inundated, which resulted in heavy absenteeism and a loss in production volumes by almost half during the first week of June. 
Meanwhile for the year ended March 31, 2018, Hayleys Fabric reported a loss of 51 cents a share or Rs.106 million net loss compared to a earnings of 35 cents a share or Rs.73.6 million net profit in the previous year. 

The sales were up 8.0 percent YoY to Rs.9.0 billion while the cost of sales was up 9.0 YoY percent to Rs.8.0 billion. 

By March end, Hayleys PLC in concert with its subsidiary companies, held 63.05 percent stake in Hayleys Fabric while the Employees’ Provident Fund held 2.67 percent stake being the fifth largest shareholder.