Piramal Glass posts Rs. 1.4 b turnover, Rs. 105 m profit in 1Q

Piramal Glass Ceylon Plc has announced its results for the first quarter of FY 2017/18 with Rs. 1,403 million of revenue and Rs. 105 million of Profit after Tax, showing a marginal decline when compared with the profitability of the first quarter of FY 2016-2017. 

The sale during the first three months of FY2017-2018 was Rs. 1,403 million, which reflects a de-growth of 17% when compared to the corresponding period of the previous year.

The domestic sale stood at Rs. 1,084 million as against Rs. 1,346 million of the similar quarter of the previous year, reflecting a de-growth of 19%. A dip in the overall domestic market was experienced which impacted the sales in all segments.

The export sales for the quarter was Rs. 319 million as against the Rs. 338 million received in the similar quarter of the previous year. The major decline in the export market was from export to India due to the changes in the tax structure with the announcement of GST implementation countrywide. All other geographical locations, namely Australia, the US and Canada, have shown positive growth figures during the period under review.

Amidst the adverse sales impact, the company showed a marked improvement in its profitability indicators. The Gross Profit during the quarter under review was 25% as compared to 18% in the similar quarter whilst the operating profit moved up to 15% from 9% in the previous year.

The incremental operational profit margin improvement was possible due to the reduction of trading sales. With the new facility now stabilised, the domestic market is being supplied mainly with in-house manufactured bottles which have replaced imported bottles. Last year due to capacity constraints a considerable portion of the domestic sale was done through imports.

Even though the operating profit has increased, the Profit after Tax was subdued and PBT was affected due to the high interest cost resulting from the long-term loan of Rs. 3 billion borrowed for the funding of the project.

The operations during the quarter were impacted by the heavy floods which occurred during the latter part of May. Though the company premises itself were not affected, access roads went underwater, hampering the transportation of raw materials and energy and the transport of bottles. Several customers’ premises and operations were also affected due to the floods which resulted in the offtake and consumption of bottles.

Further, the Ceylon Petroleum Corporation has not revised the rates of furnace oil for the past four years. The price of crude oil, which hit $ 120 a barrel in 2011, is now hovering below $ 50 for the last four years and as of date is more than a 50% reduction in the prices. Yet the corresponding furnace oil price has not been addressed accordingly. 

This state of affairs is affecting our competitiveness in the international market. The company has been requesting the Government to introduce a pricing formula based on international crude oil prices which will be a fair and transparent pricing mechanism.