Sri Lanka bought leaf factory returns to profit

July 23, 2012 (LBO) – Tea Smallholder Factories Plc, a unit of Sri Lanka’s John Keells Holdings had posted 23.9 million rupees in profits in the June 2012 quarter, turning around from a loss of 9.1 million rupees a year earlier. The firm reported earnings of 80 cents a share for the quarter.

Tea Smallholder Factories buys greenleaf from small growers and processes them into tea. Tea growers are paid on a formula based on the previous month’s sales which makes factories run losses when prices fall.

The firm said revenues rose 22 percent to 620 million rupees in the June 2012 quarter, while cost of sales rose at a slower 13 percent to 570 million rupees, allowing gross margins to grow from 1.7 million rupees to 49.9 million rupees.

Inventory cost had fallen to 260 million rupees from 308 million rupees and short term investments had risen to 22 million rupees from 14.1 million rupees.