Continuing strong contributions from overseas operations and higher prices for its products have helped Haycarb PLC to cope with pressure on its local manufacturing operations in the nine months ending December 31, 2008, enabling the Hayleys Group’s activated carbon manufacturing business to stay on target in unfavourable conditions.

A shortage of coconut shells for conversion to charcoal, its main raw material in Sri Lanka, has resulted in production falling by 12 per cent in the review period, but the Group comprising manufacturing operations in Sri Lanka, Thailand and Indonesia has posted a turnover of Rs 3.4 billion, a growth of 12 per cent over the corresponding period of the previous year.

Local manufacturing continued to be pressured by higher prices for local inputs, particularly raw materials, resulting in the Group’s Cost of Sales growing 17 per cent to Rs 2.6 billion and significantly eroding margins, the company said.

In results released to the Colombo Stock Exchange this week, Haycarb reported that profit before tax had declined 19 per cent to Rs 226 million while profit after tax, including gains from discontinued operations, had dipped 20 per cent to Rs 184 million. However, since the post tax profit of Rs 230 million reported in the corresponding nine months of 2007-08 had included an extraordinary capital gain of Rs 66 million, the Group’s bottom line performance for the period under review reflects an improvement of 12 per cent after discounting capital gains of the previous year.

Commenting on these results, Haycarb Managing Director Ananda Hettiarachchy said: "Our Sri Lankan operations are facing extremely tough conditions but we are cautiously optimistic that our operations in Indonesia and Thailand will to some extent mitigate the impacts of unrealistic exchange rates, high inflation and raw material shortages in Sri Lanka."

Notable among the positive developments at Haycarb was the Group’s ability to reduce net finance costs by 71 per cent to Rs 23 million in the nine months reviewed and to contain the growth of administrative expenses to 5 per cent.

"A great deal has been done to counter the adverse factors beyond our control with tighter management," Hettiarachchy added.