ECONOMYNEXT – Sri Lanka’s BPPL Holdings, a firm that recycles plastic bottles into export s, said it earned profits of 127millionrupees in the September 2021 quarter, down 5.5 percent from a year, despite rising freight and other costs.
Sales had increased 29 percent to 1.15 billion rupees in the period, according to interim accounts filed with the stock exchange.
However, cost of sales had increased 40 percent to 813 million rupees from 581 million rupees, a year earlier.
Meanwhile distribution costs too have risen in the period 60 percent to 86.4 million rupees from 53.7 million rupees..
Quarterly earnings per share were 42 cents. EPS for the six months to September 2021 were 74 cents with net profit at 225 million rupees on sales of 2.1 billion rupees
BPPL Managing Director and Chief Executive Anush Amarasinghe said due to COVID-19 related lockdowns they had issues obtaining raw materials such as timber and PET bottles therefore they had to import in large volumes at higher prices.
BPPL said timber and recycled PET bottles contributed 35 to 40 percent of the groups raw material costs.
“Therefore, imports to fulfill robust order volumes significantly impacted profit margins,” Amarasinghe said.
On top of this, BPPL had been affected by the container crisis.
“High freight costs continued to curtail profit growth as a drop in container availability and a reduction in shipping lines serving Sri Lanka impacted costs. This also caused delays to both imports (of raw materials) and exports (of customer orders),” Amarasinghe said.
This had resulted in a lot of raw materials and inventories to be in transitfor a longer time.
“In addition, export shipments on several occasions required 2-3x the regular delivery times, especially to our North American customers,” BPPL said.
Increases in commodity prices such as for petroleum based polypropylene, steel wire, natural fibers such as Palmyra had contributed to the reduction in profit margins.
To mitigate these issues and challenges, BBPL had increased the prices of its products.
“Local sourcing of both timber and PET bottles has recommenced following the lifting of travel restrictions which should improve profit margins in subsequent quarters. These vital raw materials are cheaper in Sri Lanka.”
The company said its second yarn factory too will operate from April 2022. (Colombo/Nov2/2021)