Buoyant by strong demand for its brush filament and polyester yarn products, Sri Lanka’s leading brush marker, BPPL Holdings PLC is considering installing a third polyester yarn plant with another brush filament extrusion plant, a new fully automated bottle washing line, and more bottle collection infrastructure including more collection centers over the next few years.
Under the second phase of the Company’s recycled polyester yarn expansion program, the second plant, with a capacity that’s 20% more than the current plant, is on track to be operational by April 2022. BPPL, CEO/MD, Dr. Anush Amarasinghe said that the third polyester yarn plant under consideration will be at the same capacity along with the brush filament extrusion plant.
“Demand remains very strong for BPPL’s products. All our brush production lines are running at 72% of full capacity whilst both our brush filament and polyester yarn production lines continue to run near full capacity. In the reported period, brushes and related revenue grew 38% over the corresponding period in the previous year and brush filaments and polyester yarn sales grew by 109%,” he said.
BPPL’s Net earnings for the six-month period ended in September was Rs.226 million or Rs0.74 per share, up by a steady 16% compared to the Rs.195 million recorded in the previous year. Growth was largely driven by a robust 46% increase in revenue
BPPL’s gross profit margins, however, fell during the period to 30% from 34% for the following reasons:
-COVID-19 related “lock downs” had a significant impact on the core timber and PET bottle raw material supplies forcing the Group to import large volumes of both items at higher prices. Timber and recycled PET usually account for 35-40% of the Group’s raw material costs. Therefore, imports to fulfill robust order volumes significantly impacted profit margins.
-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).
-The Group’s cash flows were also affected by these delays. There was a significant increase in “raw
materials in transit” for the period (included in inventory) due to import delays. In addition, export shipments on several occasions required 2-3x the regular delivery times, especially to our North American customers.
-Recent increases in commodity prices such as for petroleum-based polypropylene, steel wire, natural
fibers such as Palmyra also affected profit margins
Founded in 1984, BPPL Holdings manufactures a range of high quality, durable brushware and cleaning
products for both professional and household applications. Leveraging on its sustainable manufacturing
and vertically integrated processes, coupled with commitment to consistent quality, on-time delivery,
reasonable pricing and flexibility allows it to supply to major distributors and retailers of cleaning tools
worldwide.
The Group has in recent years diversified its business lines to include synthetic filament extrusion and
polyester yarn production. These new lines cater to customers both in Sri Lanka and overseas and are
expected to be major contributors to group financials over the medium term.