Drop in home construction sets back ceramic tile sales
View(s):By Duruthu Edirimuni Chandrasekera
With a slowdown in home building owing to the interest rate hikes seen last year, Sri Lanka’s ceramic tile industry has suffered a major setback, industry experts say.
“The (ceramic) tile market is sluggish for the last six months mainly because the home building sector has dropped. Given the nature of this industry we can’t cut down on the production and we’re struggling to sell the output,” Mahendra Jayasekera, Managing Director Lanka Tiles PLC, which owns Lanka Walltiles (LWL) PLC and Lanka Floor Tiles PLC (LFT), told the Business Times. He said this downturn will be reflected in their year end results for last financial year. “We’ll be happy if we can report the same amount of profit as last year,” he said, noting that he’s not upbeat about the recovery in the market in the near term.
He added that this quarter, LFT has done much better than LWL. “LWL has 60 per cent of the market and it really felt the downturn. Our stocks have built up along with debts and we’re running at 94 per cent capacity,” he said. He said that LWL’s export order book is full for the next four to five months and he’s looking to increase exports further. “LWL has no choice but to export.” He said that both LWL’s and LFT’s exports have all doubled last year. “The reason is that many Italian and Spanish factories which were supplying to Australia, USA, Canada, Sweden and Netherlands scaled down or shut down and we increased our exports to these countries.” He said that interest rate increases, inflation and cost of construction have all contributed to the drop in home construction during the past year.
He noted that the trim tile (small tile) plant which they had commissioned last year had helped them to enter USA and the Canadian markets. “These we almost lost when we shut our Balangoda factory,” he added. He said that Lanka Tiles will expand its showrooms in a bid to convert credit sales to cash sales. “We found that dealers and distributors weren’t performing – again due to the credit crunch. By year end we want to expand our 27 showrooms to 50.”
He reiterated that local business sentiment has to improve in order for manufacturing industries to get back on track. “Investments in infrastructure alone won’t be enough for us to survive.”
Follow @timesonlinelk
comments powered by Disqus