Hayleys 3Q boosted by strong performance of group’s multiple lines of business

Chairman/CEO Mohan Pandithage

Co-Chairman Dhammika Perera

Hayleys PLC delivered strong top and bottom line performances for the three months ended on December 31, 2021 (3Q22), as the group’s multiple business lines did well albeit there were signs of rising costs, which may have pinched its gross margins a bit. Hayleys, Sri Lanka’s most diversified conglomerate, reported revenues of Rs.92.2 billion for the quarter under review, up 42 percent from the same period in 2020. The corresponding direct costs rose by 47 percent to Rs.70.1 billion, reflecting that the group had to contend with the rising costs.The group with interests in hand protection, agriculture, plantations, textiles, consumer and retail, transportation and logistics and leisure among others, reported operating profit of Rs.10.5 billion for the three months, logging an increase of 42 percent, in line with the increase in the top line. 
The group reported earnings of Rs.6.04 a share or Rs.4.53 billion for the October-December 2021 period, compared to earnings of Rs.3.63 a share or Rs.2.72 billion in the same period in 2020. This translated into a 67 percent increase. For the nine months through December 31, 2021, the group reported earnings of Rs.12.66 a share or Rs.9.49 billion, compared to earnings of Rs.5.45 a share or Rs.4.09 billion in the comparable period in 2020, marking a 132 percent increase. 

The nine-month revenue was Rs.242.3 billion, up 41 percent. 
Hayleys share added 50 cents or 0.40 percent on Tuesday to end at Rs.125.00. 
Hayleys PLC became a pandemic highflier, due to its strong exposure to exports and the consumer markets in Sri Lanka through Singer (Sri Lanka) PLC, which did extremely well during the two years of the pandemic, due to strong demand. 
For instance, the consumer and retail segment of the group, which is represented largely by Singer Sri Lanka, generated revenues of Rs.60.2 billion in the nine months, compared to Rs.53.5 billion in the similar period in 2020. However, this segment could run into fresh challenges in FY 2022/23, should the foreign exchange troubles persist and import restrictions are further tightened, Fitch Ratings cautioned recently. 
Meanwhile, the group’s largest dollar income earnings segment, the hand protection segment, generated revenues of Rs.30.2 billion, compared to Rs.21.0 billion in the same period in 2020. This segment saw signs of languishing in the recent few quarters with the easing of the pandemic-fuelled demand for gloves, normalising of supplies, decline in prices and rising commodities costs. 
However, the performance isn’t out of sync with what the management expected for this unit. 
Other segments, which did extremely well during the period, were eco-solutions, purification products, textiles, construction materials, agriculture, plantations, transportation and logistics. 
While the leisure sector did well at top line level, with the revenues reported at Rs.1.9 billion, compared to Rs.846.2 million in the same period in 2020. The group still lacks the critical mass to turn a profit. 
Billionaire businessman Dhammika Perera owns a 51.01 percent stake in Hayleys PLC.