Sunday Nov 24, 2024
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Wednesday, 9 August 2017 00:00 - - {{hitsCtrl.values.hits}}
Lanka Ashok Leyland’s top line for the first quarter of 2017/18 stood at Rs. 3.3 billion, a 59% increase over the 1st quarter of 2016/17. This marks the second successive quarter the company has crossed a turnover of Rs. 3.3 bn. Gross profit for the quarter registered a 37% increase year on year to Rs. 250.5 million despite higher import costs squeezing gross profit margins which fell to 7.7% against 9% a year earlier.
Operating costs fell 42% to Rs. 51.0 million for the quarter owing to a non-recurring reversal to boost operating profit to Rs. 210.8 million, a 102% increase over 2016. Prudent working capital management and cash flow optimisation helped reduce net finance costs by 62% to Rs. 10.3 million this quarter against Rs. 27.1 million for the same period last year. The result of a strong top line performance, a substantial provision reversal and efficient cost management saw the firm post a profit of Rs. 168.4 million, a remarkable 261% improvement year on year.
As of 30 June, Lanka Ashok Leyland held inventories valued at Rs. 4.4 billion signifying a 14% increase from 2016/17, while interest bearing liabilities only rose 5% to Rs. 2.1 billion.
Commenting on the increase of inventories Lanka Ashok Leyland CEO Umesh Gautam
says, “The rise in inventories comes as we have decided to upgrade our product line to switch over to more environment friendly BS3 vehicles with ABS Brakes and other upgraded specifications. For effective launch of BS3 products in Sri Lanka we have imported over 500 vehicles to give impact to market that in future all vehicles marketed by us will be BS3 Norms with upgraded specifications.”
Asked about their performance, Gautam noted, “This quarter’s performance has been commendable and reinforces the momentum and trajectory the company is on off the back of an impressive 4th quarter of 2016. Even excluding the provision reversal this quarter, the growth in sales in spite of macroeconomic conditions is heartening and gives new impetus for the management going forward. Lanka Ashok Leyland has expanded to the Eastern province effectively covering every part of Sri Lanka and establishing a truly island-wide footprint to build off.
“The exchange rate has continued to decline over the period pressuring our margins which has made it extremely important that we manage our costs effectively and keep our operation as lean as possible. Despite the high interest rate environment we operate in, our top line continues to be driven by strong sales growth continuing a trend we saw in the previous quarter. Furthermore, the company has renewed focus on its spare parts division which saw a 25% increase in revenue.”
“Looking ahead, the company is proud to begin to promote a new generation ‘Sunshine’ School Bus with an ideal combination of safety, comfort and value powered with revolutionary design, being the first frontal crash protected and rollover compliant bus that makes it unique in the school bus segment and also heavy commercial vehicles that adhere to higher environmental standards in line with similar trends in other countries. This will however require some investment and technical training however we are confident that the market will respond positively to our efforts.”
