Coconut Supply shortages and high coconut shell prices dent Q1 profits

10 Aug 2017

Activated carbon manufacturer Haycarb PLC said the supply shortages in the Indonesian operations and high coconut shell prices in Sri Lanka, India and Thailand are hurting its operations, and hence is looking at the possibility of passing on a fair share of the cost to the customers.     

According to the recently released interim financial accounts, Haycarb, a unit of Hayleys group, reported earnings of Rs.3.62 a share or Rs.107.5 million for the April – June quarter (1Q18), down 28 percent year-on-year (YoY)

However on a standalone basis, Haycarb, the company recorded a net profit of Rs.172.2 million, up as much as 104 percent YoY. 

The pressure on supplies and the costs are expected to remain throughout the current financial year. 
“Shortages and price increases in coconut shell based charcoal supplies are expected to continue through the current financial year in all the key coconut producing countries in Asia”, said Rajitha Kariyawasan, the Group Managing Director.  

“The challenge in passing its full cost impact to end customers is a major concern to maintain activated carbon business’ expected margins through the year. The company is in the process of reviewing its prices to pass on a fair part of this impact to its customers after extensive discussions”, he further said. Haycarb is the pioneer manufacturer of coconut shell activated carbon in any coconut producing country with manufacturing facilities in Sri Lanka, Thailand and Indonesia supported by marketing offices in the USA, UK and Australia. The group made a revenue of Rs.3.3 billion, up 12 percent YoY supported by increase in throughput, value added portfolio and the geographical expansion of export markets.

However, the direct costs rose by a much faster rate of 21 percent YoY to Rs.2.7 billion denting the gross profit by 15 percent YoY to Rs.641 million. The before-tax profit of activated carbon business fell to Rs.155.7 million for the quarter from Rs.243 million YoY.   Kariyawasan said the central and country-specific management teams are working aggressively to ensure a secure supply chain in the current adverse situation while focusing on controlling costs and improving efficiencies.  

Apart from activated carbon, the group has interests in to regeneration services, environmental engineering and leisure.

By June 30, 2017, Hayleys PLC held 67.73 percent stake in Haycarb while the Employees’ Provident Fund, the state controlled private sector pension fund held a 4.77 percent stake being the second largest shareholder. 


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