PGP Glass September profit down on subpar and soaring costs

• Company aggressively looks for overseas market opportunities for glass bottles for specialty liquor to blunt rising costs

PGP Glass Ceylon PLC reported lower profits in the three months to September as the company saw impaired revenues in both domestic and export markets, while the costs rose substantially as a result of the global commodities price boom forcing the company to continue its focus on premium products for international markets which can partially offset soaring costs. 

Formerly known as Piramal Glass Ceylon PLC, Sri Lanka’s only glass bottle manufacturer reported revenues of Rs.2.26 billion for the July - September quarter, largely unchanged from a year ago levels of Rs.2.23 billion. 
The company reported earnings of 32 cents or Rs.307.6 million for the quarter compared to 38 cents a share or Rs.359.9 million in the comparable period last year. 

The company said it lost domestic sales due to the lockdowns re-imposed from mid-August, which continued for 40 days, although the company by and large managed to sustain its revenues at similar levels to that of last year. 
Meanwhile, the company could not realise its full export potential during the forgoing quarter due to global supply chain disruptions, which had an adverse impact on container availability and the freight cost, which went several times higher.  “The domestic sale during the quarter was at Rs. 1,577 million as against Rs.1, 560 million of the previous year’s similar period. The export revenue showed a marginal growth of 3 percent as compared to the previous year with revenue of Rs. 687 million as against Rs. 670 million of previous year”, the company said in a statement. 

Besides the top line pressure, the company also felt the brunt of soaring commodities prices in the world economy as they had to contend with surging input costs, energy costs and other overheads, a condition which is not unusual for a manufacturing enterprise since around the second quarter this year.    And the company also expects such costs to rise further in the immediate future. Sri Lanka’s producers who were facing producer inflation at near double digit inflation continuously through August this year saw prices accelerating to 11.0 percent in September from the levels seen a year ago.     “We are also facing a similar situation in the latter half of 2Q, with raw materials, packaging materials and LPG prices at all-time high and forecasted to further rise in coming days”, the company said. 

In a bid to mitigate the unprecedented cost escalation, the company said it plans to optimise its operations using digital and analytics tools while continuing to focus on premium products with decoration for international customers which is expected to partially reduce the implication from soaring costs on the domestic market. 
Meanwhile, the company continues to look to expand its international market portfolio in a bid to minimise the demand fluctuation in any one or several markets due to the uncertainty brought about by the pandemic. 

“The company is aggressively exploring new international markets for its products in speciality liquor segment. The strategy to innovate in new product design and development, with increased global footprint has helped the company to effectively mitigate demand fluctuations in its existing markets due to the pandemic situation,” said Sanjay Jain, Executive Director and Chief Operating Officer at PGP Glass Ceylon.  The company through its Horana plant manufactures glass containers for multiple industries including food, liquor, pharmaceutical, agrochemical and soft drinks. 

The company changed its name to its current corporate name effective from September 1 after PGP Glass Private Limited - India bought 56.45 percent stake in Piramal Glass from the then controlling shareholder Piramal Glass Private Limited - India on March 30, 2021. 

Thereafter PGP Glass offered a mandatory offer to buy the remaining shares of the company resulting in the 78.65 percent stake. 

Employees’ Provident Fund had 9.51 percent stake in the company being its second largest shareholder.