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Hayleys PLC Chairman Mohan Pandithage
Hayleys PLC Chairman Mohan Pandithage says Sri Lanka is facing its pivotal time offering a unique opportunity to “reset” socio-economic model and called for “collective sacrifices” by all to be more resilient and achieve long term prosperity.
The call for strong action from Pandithage is contained in the Chairman’s review in the Hayleys PLC Annual Report for FY2023, in which year the most diversified blue chip reached a major milestone of highest ever pre-tax profit of Rs. 42.75 billion, up by 20% from the previous year.
The record performance was boosted by strong contributions from Hayleys’ Transportation and Logistics, Purification, Plantations, Agriculture and Hand Protection Sectors.
“Despite the many challenges that prevailed, eight out of twelve sectors recorded PBT growth during the year, attesting to their ability to effectively navigate external volatilities,” Pandithage added.
“I truly believe that this is a pivotal time for our country, offering a unique chance to reset our socio-economic development model towards more resilient, equitable and sustainable growth,” said Hayleys Chairman in his review
He said that recent policy interventions to restore macro-economic stability have enabled the country to reach a working equilibrium, which together with the approval of Extended Fund Facility by the IMF have set the country’s economy on a path to recovery.
“The need of the hour is to sustain this reform momentum through the will and resolve of the leadership, protecting the vulnerable from the current crisis and driving towards greater accountability and transparency,” emphasised Pandithage.
“Collective sacrifices by the Government, private sector and public is required to achieve this much needed stability and long-term resilience, a commitment we, as an organisation, are willing to make to support the country’s economic revival and prosperity,” Hayleys Chief stressed.
Noting that the global growth is expected to be subdued in 2023, Pandithage said in Sri Lanka, however, macro-economic fundamentals are poised to record gradual improvement over the medium-to-long term.
“Inflationary pressures are anticipated to gradually ease in ensuing months, as external pressures moderate and supply-side dynamics normalise. Interest rates are also expected to record a gradual decline as evidenced by its downward trajectory in recent months, reflecting easing inflation and reduction in the high-risk premia attached to debt restructuring concerns,” he said.
“The Sri Lankan rupee is also expected to gradually stabilise towards the latter part of 2023 driven by the anticipated improvement in external sector activity and restoration of macro-economic stability,” he added.
Stressing that “with every crisis comes an opportunity,” Pandithage said while Hayleys is not naïve to the challenges that are inevitable in the short-term, it chooses to be optimistic.
“We are firm in our belief that optimism is a prerequisite for resilient leadership and better outcomes and we are confident that the solid foundations we have put in place to strengthen our resources, capabilities, people and partnerships will stand us in good stead to withstand potential stresses,” Pandithage added.
“As we look to the future with renewed hope and optimism, key strategies for driving growth in the years ahead include innovation, market development, customer acquisition and operational excellence,” Hayleys Chief told shareholders in his review in the Company’s FY23 Annual Report.
Pandithage described Hayleys to be one of Sri Lanka’s most socio-economically impactful organisations, having nurtured extensive relationships with customers, suppliers, business partners and communities across value chains.
He said it also bears emphasising that the vast majority of the positive socioeconomic impacts we create is in the ordinary course of business. For example, the Group generated 5.5% of Sri Lanka’s total export income during the year, translating to foreign exchange income of $ 650.61 million. The Group also paid Rs. 24.33 billion in taxes within Sri Lanka, supported the employment of 29,453 employees in Sri Lanka, with 57% operating outside the Western Province.
Injecting value through inclusive business models has always been part of Hayleys ethos and the Group connects over 11,000 rural outgrowers, suppliers and other business partners to global supply chains through diverse businesses.
“We are also a catalyst for capacity building and skill development across key industries, propagating knowledge and best practices through farmer extension services and structured training programs delivered across the island,” Pandithage added.
In FY23, Hayleys Group also delivered its highest-ever Revenue of Rs. 487.43 billion, representing a 44% y-o-y increase led by strong growth in export-oriented sectors including Transportation and Logistics, Textiles, Purification and Hand Protection Sectors. With a share of 28% of Consolidated Revenue, Transportation and Logistics emerged as the largest contributor to Group Revenue.
Group Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) and Group Earnings Before Interest Tax (EBIT) increased by 69% and 82% respectively to reach record-highs of Rs. 71.08 billion and Rs. 61.07 billion in FY23 led by the Transportation and Logistics, Purification, Agriculture and Plantation Sectors. Performance was upheld by both favourable exchange rate dynamics and increased business activity, Hayleys Chairman added.
Finance Income increased by 23% to Rs. 20.72 billion while Finance Cost more than doubled to Rs. 39.54 billion in view of the high interest rate scenario that prevailed.
The Group’s Tax Expense increased by 98% to Rs. 15.08 billion in FY23 with the broad-based increase in tax rates resulting in the Group’s effective tax rate increasing from 21% to 36% during the year. Resultantly, Profit After Tax for the Group recorded a decline of 2% to Rs. 27.67 billion in FY23.
The Group’s Total Assets increased by 2% to Rs. 412.74 billion driven by the expansion in Property, Plant and Equipment; this represents investments in the Hand Protection Sector’s new sports glove manufacturing facility, machinery upgrades in the Textile Sector and the Transportation and Logistics Sector’s investments in a multi-user distribution centre.
Pandithage said Hayleys Group’s continued investments in expanding capacity, strengthening manufacturing infrastructure and improving product capabilities amidst the prevalent uncertainties represents our optimism in the country’s economic recovery and long-term opportunities for value creation. These investments have also strengthened the Group’s foreign exchange generation capabilities, which will further diversify the earnings profile and strengthen resilience to exchange rate volatility.
The Chairman noted that strength of the Hayleys Group’s financial profile validates strategic interventions in recent years to strengthen business resilience through pursuing increased diversification of earnings, optimising working capital cycles and realigning the debt profile to mitigate exposure to fluctuations in interest and exchange rates.
Pandithage also said the successive challenges faced by Sri Lankan businesses over the past three years had prompted the Group to reposition and optimise its businesses with the aim of building resilience.
“Fuelled by the Group’s deeply rooted ‘can-do’ attitude, our teams demonstrated strategic foresight and nimble execution to ensure continuity of operations across all locations, effectively plan inventory cycles, sustain customer confidence and manage liquidity,” Hayleys Chief Pandithage added.
The Board of Directors of Hayleys PLC in FY23 comprises Mohan Pandithage (Chairman), Sarath Ganegoda, Rajith Kariyawasan, Ruwan Waidyaratne, Jayanthi Dharmasena, Rohan Karr, Hisham Jamaldeen, Harsha Cabral PC, Aravinda Perera and Gamini Gunaratne.
