Financial Times

ACL Cables forecasts higher profit, eyes export markets
By Duruthu Edirimuni
ACL Cables, the dominant cables manufacturer, appears to have turned around and is forecasting a profit of Rs. 300 million by March 2005, on the back of higher copper prices and new export orders.

Suren Madanayake, Executive Director, ACL Cables, told The Sunday Times FT that their latest plant in Ekala will help meet the demand coming from India and Japan. "We have secured certain export orders such as to manufacture magnet wires," he said.

ACL Cable recorded a net profit of Rs. 106 million for the year ending March 31 2004 in the wake of global market prices of copper, the company's main raw material, escalating severely during 2003, causing a huge setback to the company and industry at large.

Another blow came in the wake of severe price competition among the domestic cable manufacturers resulting in ACL Cables reporting unattractive profits over the past few years.

Nevertheless with the increased product pricing aligned with the growing raw material costs and copper prices settling down globally, throughout the first three months of 2004, the company has come through the sticky situation.

The demand for copper wires from China contributed much to the global increase in the commodity price. Madanayake said the company is planning to cash in on this trend , which is expected to continue into the next year.

Analysts expect the company to perform soundly during the next financial year, while aggressively pursuing export orders by taking advantage of the free trade agreement with India.

The group exports only around eight percent of its products. However analysts said it is expected that Indo-Sri Lanka free trade agreement will offer plenty of opportunities to the ACL group to tap the Indian market where the margins are much higher. India has a massive market for cables and out of all the exports to India under the free trade agreement the bulk is copper which accounts to over Rs. 15 billion worth of exports per annum.

The net profit for 2003/04 increased by 41 percent compared to the figure reported in the corresponding year of Rs. 75 million. Much of the profit, to the tune of Rs. 99.9 million equivalent to 94 percent was earned in the last quarter ending March 31, 2004.

ACL cables has over 80 percent of the domestic cables market and 60 percent of the industrial cable market. While ACL concentrates more on domestic cables, its subsidiary, Kelani Cables concentrates on industrial cables.

In addition to the core operation, the group contains several subsidiaries engaged in the manufacturing and distribution of different kinds of cables, wires and PVC products.

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