Lankem posts strong 4Q performance | Sunday Observer

Lankem posts strong 4Q performance

12 June, 2021
MD Suren Goonawardene
MD Suren Goonawardene

Lankem Ceylon PLC posted a strong Q4 performance for the FY 2020/21 recording a Pre-Tax Profit of Rs. 229 mn against a loss of Rs. 185 mn as reported in 2019-20. The company achieved aquarterly revenue of Rs. 1 bn recording a growth of 78% in comparison to the corresponding period last year. 

These results were achieved  amidst the Covid -19 pandemic which  disrupted markets, including global supply chains. These resulted in organizations having to change their strategies putting a huge strain on operating models.  Despite these challenges, the Company changed its strategies accordingly ensuring the right product mix was available at the right time to meet seasonal demand. As a result, Paint and the Crop Protection divisions of the Company met and delivered exceptional performance in meeting seasonal demand for the  Maha and Yala season resulting in the Company achieving a Gross Profit of Rs. 260 mn for the quarter versus Rs. 138 mn the previous year. 

“The company closed the financial year on a high, achieving a revenue of Rs. 3.4 bn in comparison to Rs. 2.9 bn achieved in the previous year, recording a growth of 18%, said Managing Director, Lankem Ceylon PLC, Suren Goonawardene “The Gross profit of Rs. 827 mn is an increase by 46% compared to 2019/20.

The improvement in margin is a result of optimizing the sales mix in addition to the stringent cost management initiatives that were implemented by restructuring the operation at our manufacturing plants. This has resulted in a drastic reduction of operational losses while the ongoing business restructuring has greatly supported company performance. In challenging times It was imperative that  the operation be able to have an agile structure to be able to not just survive  but compete.   This  resulted in the EBIT of the company closing at Rs.521Mn against Rs.66Mn reported in 2019-20,” he said.

The reduction of interest rates has immensely contributed towards improved liquidity, mainly due to the accommodative monetary policy introduced by the Central Bank of Sri Lanka to support the revival of economic activity.

The savings by way of interest cost of Rs. 106 mn for the year is a mere 18% reduction compared to the previous financial year. Furthermore, the debt moratorium extended to the private sector by the Government enabled the corporate sector to sustain cash flows in an extremely challenging year.

Lankem Ceylon as a Group which comprises hospitality, packaging and distribution clusters posted a revenue of Rs. 17.6 bn recorded a growth of 14% against the previous FY with better than expected results reported from the distribution sector. In addition, SunAgro Lifescience Limited, a fully owned subsidiary of Lankem  which also specializes into high end products used in Crop Protection market has reported tremendous performance contributing Rs. 92 mn to the bottom line of the group. 

The above numbers are unaudited and subject to audit.