Sri Lanka’s Piramal Glass in Sept quarter loss as costs rise

ECONOMYNEXT - Sri Lanka’s Piramal Glass Ceylon said it made a loss of 8.5 million rupees in the September 2018 quarter compared with net profit of 49 million rupees a year ago as higher fuel prices raise costs.

Sales during the second quarter of FY2018-19 rose 12 percent to 1,878 million rupees, although domestic sales were stagnant, interim results filed with the stock exchange showed.

The container glass maker, a unit of India’s Piramal group, reported a loss per share of one cent in the September 2018 quarter compared with earnings per share of five cents the previous year.

In the six months to September 2018 EPS fell to four cents from 16 cents in the same 2017 period.

“Whilst during the quarter, the company ensured a top line growth of 12%, gross profit margins fell from 21% to 10%,” the company said in a statement.

Piramal Glass Ceylon said it is investing in a new bottle production line which would enable it to increase production of smaller bottles to meet a shift in consumer preferences to smaller pack sizes that also eroded gross profit.

“Due to the increase in levies and taxes, the final products are becoming more expensive. This has resulted in the consumer shifting towards smaller pack sizes.”

The quarterly loss stemmed mainly from higher costs whose full impact will be felt in future quarters, the company said.

“The gross profit during the period under review was severely impacted by the fuel increase which in turn has directly impacted the prices of raw materials, packing material and transportation costs.

“The margins further declined due to the increase in LPG costs by 35% and furnace oil increase by 15%.

“The published results are only partly impacted by this, with the full impact being yet to be felt in the future quarters. In this situation, the company has been compelled to pass on part of the inflation to the second half of the current financial year.”

Piramal Glass Ceylon said it managed to increase exports to offset low domestic demand with export sales up by 55 percent to 1.4 billion rupees.

“The management made special efforts to expand their sales in the export market in a bid to offset the domestic setback,” the statement said.

Exports to Canada, USA, Vietnam and India took the lead amongst the increased export sales.
(COLOMBO, 30 October, 2018)