Haycarb PLC, the Hayleys Group's value-added activated carbon manufacturer, has achieved a consolidated profit before tax of Rs 421 million for the six months ending 30th September 2010.

Net profit increased to Rs 343 million over the corresponding six months of last year and Group turnover improved by 22 per cent to Rs 3.1 billion, according to figures released to the Colombo Stock Exchange.

Profit attributable to equity holders of the company stood at Rs 305 million for the same period.

Local manufacturing operations posted a net profit growth of 10 per cent for the half year, but profit for the second quarter reflected a decline of 11.6 per cent over the corresponding quarter, principally as a result of higher charcoal prices, the company said.

 "Charcoal purchase prices in Sri Lanka have increased by more than 16 per cent in comparison with the first six months of last year," Haycarb Managing Director Rajitha Kariyawasan said.

Additionally, the significant appreciation of local currencies in Indonesia, Thailand and Sri Lanka against the US Dollar also contributed to a reduction in the gross margin of the group, he said.

These two factors are expected to remain a challenge through the second half of the year, during which the impact of an increase in furnace oil prices would also be felt, Mr. Kariyawasan disclosed. The difficult economic environment in the US and Europe, along with intense competition makes it extremely difficult to pass on cost increases to customers, he said.

A strategy of overhead recovery through higher capacity utilisation supported by growing demand for activated carbon, a focus on higher value products combined with technical efforts had enabled Haycarb to mitigate to some extent the effect of increasing raw material and other production costs and the appreciation of local currencies, Mr. Kariyawasan added.

Supporting initiatives to focus on higher value added products, the company has also embarked on a new marketin