Sri Lanka's Hayleys Fabric back in profit in June quarter

ECONOMYNEXT –Sri Lanka's Hayleys Fabric returned to profit in the June 2018 quarter with net earnings of 16 million rupees compared with a loss of 25 million rupees a year earlier, accounts filed with the stock exchange showed, on improving margins and growing order book out of Europe thanks to GSP Plus.

The fabric maker, a unit of Hayleys PLC, reported earnings per share of eight cents in the quarter compared with a loss of 12 cents a year ago.

Sales grew 17 percent in the quarter to 2.4 billion rupees from a year ago, while cost of sales grew at 15 percent to 2 billion rupees, leading to a gross profit of 229.8 million rupees, up 40 percent from a year ago.

"Directly marketing our own branded range of innovative fabrics has helped us achieve better margins," Hayleys Fabrics Managing Director Rohan Goonetilleke said.

The reinstatement of GSP Plus has also seen an increase in the company's order book.

"Everyone in Sri Lanka's apparel industry is now producing at full capacity because of GSP Plus, and there is less competition for orders," Goonetilleke said.

Going forward, increasing raw material prices are expected to impact margins.

"Global yarn prices have increased and we may have to ride through that because customers are not willing to immediately absorb the additional cost.

"This will impact margins going forward, but overall, we expect a good year ahead," Goonetilleke said.