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Royal Ceramics buck Sri Lanka trend to report higher profits
Tile maker Royal Ceramics has forged ahead reporting higher profits in the June quarter while other ceramic firms lost money and market share amid complaints of rising energy costs and foreign competition.
Royal Ceramics group net profit for quarter ending June 2007 shot up increased 60 percent to 53.5 million rupees.
According to provisional results sent to the Colombo bourse, the firm's revenue increased 42 percent to 765 million rupees.
Royal Ceramics operates two tile plants in Eheliyagoda and Horana, and is also investing in a new porcelain tile factory in Homagama to meet rising demand, as well as a sanitaryware plant.
Profit before tax was up 31 percent to 56 million rupees in the quarter under review.
The firm also reported a sharply lower tax charge - down 74 percent to 2.4 million rupees.
At company level, while revenue remained flat at 329 million rupees, net profit shot up 265 percent to almost 29 million rupees from 7.9 million the same quarter of the previous year.
Most of the firm's tiles are sold in the local market where demand has soared owing to the construction boom in recent years. It also exports a small amount of tiles.
Royal Ceramics has a 40 percent share of the domestic market for tiles and operates an islandwide network of 35 showrooms.
Royal Ceramic's sanitaryware unit was scheduled to start production this month, making it the sole local manufacturer to supply the booming construction market.
RCL has set up a subsidiary called Rocell Bathware Ltd. and built the plant at the Panagoda industrial park with an investment of 1.4 billion rupees.
Tharana Thoradeniya, CEO of Rocell Bathware, told LBO earlier this year that trial production is scheduled to start in August with an initial capacity of 250,000 pieces of sanitaryware.
The plant will employ about 180 people.
Royal Ceramics decided to venture into the manufacture of sanitaryware as part of its diversification strategy and because there is no serious local production and also because of the rapid growth of the property market.
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