Hayleys Fabric records 4Q profit; eyeing business expansion

Hayleys Fabric PLC, the knit fabric maker of the Hayleys group, turned a profit for the three months ended in March 2021 (4Q21) but the performance was a moderation from the previous two quarters. 

The company, which is in the highly lucrative fabric making business, generated earnings of 40 cents a share or Rs.166.3 million during the quarter, compared to a loss of Rs.169.4 million recorded in the year earlier period. 
The revenues swelled 66 percent year-on-year (YoY) to Rs.3.7 billion, albeit recording a slowdown from the previous two quarters.

The company in its fiscal second and third quarters generated earnings of Rs.261 million and Rs.202.6 million, on revenues of Rs.4.2 billion and Rs.3.8 billion, respectively.   The company last month paid Rs.3.95 billion, soon after the close of the financial year, to acquire a 98.84 percent stake in South Asia Textiles Limited, a complementary fabric maker from Ambeon Holdings PLC.

Leading up to the acquisition, the company’s cash and cash equivalents jumped six folds to Rs.646 million, supplier credit rose by as much as Rs.1.4 billion and took in fresh long-term borrowings worth of Rs.530 million during the financial year ended on March 31, 2021.  The export-oriented fabric and garment makers are seeing their fortunes changing for the better, as their key markets are returning to normalcy, recovering the lost demand for nearly an year from the widespread lockdowns and stay-at-home orders in Europe and America.  While the current virus-related restrictions may not have a much impact on large-scale fabric makers such as Hayleys Fabric, as export-oriented manufacturing can continue under the health guidelines, the domestic fashion designers and clothing retailers, who are mostly small scale, could go out of business. Last year, Hayleys Fabric restarted manufacturing within a month from closure, due to the initial lockdowns and by May 2020, the company reached its full production capacity after shifting to ‘health clothing’ from fashion and sport-related fabric.

Meanwhile, for the full year ended on March 31, 2021, the company recorded earnings of Rs.1.77 a share or Rs.736.2 million, up from 56 cents a share or Rs.231.4 million in the previous year. The revenues rose by 21 percent YoY to Rs.14.8 billion. 

Hayleys PLC along with its subsidiaries own 63.05 percent in Hayleys Fabric while the Employees’ Provident Fund has a 2.67 percent stake in the company, being its third largest shareholder.