ALUMEX PLC [ALUM]- INTERIM RESULTS 30 JULY 2015

Alumex PLC (ALUM.N:LKR18.2) a subsidiary of Hayleys PLC (HAYL: LKR350.0) has been the market leader in manufacturing a diverse portfolio of Aluminum profiles in Sri Lanka for many years. Founded in 1986, the Alumex group consists of two fully owned subsidiaries – Alco Industries (Pvt) Ltd and Avro Enterprises (Pvt) Ltd which aid in locally manufacturing Aluminum extrusions for various industrial and architectural use.

Net revenue increased 23.3% YoY to LKR738.9 mn in 1QFY16. ALUM witnessed an increase in revenue of 23.3% YoY from LKR599.2 mn to LKR738.9 mn whilst the full year revenue increased by 17.9% in FY15 to LKR3,307.2 mn. Contributed mainly by the increase in demand for Aluminum profiles from the re-commencement of public infrastructure development projects and the saliently growing residential property market in the country.

Gross profit margin narrowed to 20.5% YoY from 23.6% in 1QFY15 even though ALUM’s gross profit marginally increased by c.7% YoY to LKR151.5 mn. Whilst revenue for the quarter grew by c. 23% YoY in 1QFY16, the cost of sales witnessed an increase of 28.4% YoY to LKR587.4 mn due to the increase in global aluminum prices during May 2015. The monthly average price increased by c.2.5% YoY to USD 1,836.8 per metric ton from USD1,792.4 per metric ton in May 2014.

EBIT margin dipped to 9.5% YoY in 1QFY16 from 12.6% because other income declined by c.30% YoY in 1QFY16 to LKR2.1 mn whilst distribution expenses increased 143.7% YoY to LKR19.5 mn from LKR8.0 mn and administrative expenses increased c.5% YoY to LKR64.1mn.

Net profit declined c.11% YoY to LKR56.3 mn. The company recorded a decline in net profits of c.11% YoY to LKR56.3 mn amidst a growth of 25.9% YoY in FY15. Also the NP margin dipped to 7.6% YoY in 1QFY16 from 10.5% YoY from 1QFY15. This was mainly due to finance costs witnessing a notable spike of c.743% YoY in 1QFY16 to LKR13.5 mn with an increase of short term interest bearing borrowings by c.90% YoY to LKR50.8 mn to fund the working capital requirements of ALUM during the quarter.

Latest news and developments. LUMIN brand of door and window systems (the latest addition to ALUM’s product portfolio introduced in 2015) with many new product designs and the ongoing construction of the centralized warehousing system will further strengthen ALUM in the coming years. Also with the forecast growth in the Sri Lankan construction sector in the future, with major infrastructure and mega mixed development projects, ALUM will entice several opportunities in the medium term.