April 25, 2007 (LBO) – Hayleys subsidiary Talawakelle Tea Estates (TTEL), has reported a sharp fall in first quarter profits after a strike crippled production late last year. Net profit for the three months ended March 31, 2007 fell 60 percent to 30.2 million rupees from 75.8 million rupees in the same 2006 period.
Revenue was down 16 percent to 402 million rupees over the same period, according to interim results released to the Colombo Stock Exchange.
At group level, TTEL made a net profit of 30.5 million rupees for the quarter.
The company makes the best profits in the first quarter during the western high grown quality season when teas from the western slopes of the central massif fetch their highest prices.
Talawakelle Tea Estates produces quality high grown teas and has some well known estates like “Great Western” and “Mattakelle”.
The Talawakelle region was among the worst hit high grown tea districts by last yearâ€™s strike.
Production of tea has fallen sharply in Sri Lanka’s central hills owing to the effects of a strike by labour unions to back demands for higher pay last November.
Total high grown tea production crashed to 3.6 million kg in February 2007, the lowest since the 1982 drought when 3.4 million kg was produced.
This February’s high grown production was 32 percent lower than the 5.3 million kg achieved in the same month in 2006, brokers Asia Siyaka Commodities said.
Production fell as estates were forced to prune and discard overgrown tea after the strike and bushes could not recover as there was little or nor rain thereafter, the brokers said.
Sri Lanka’s total tea production in February fell to its lowest monthly level in 10 years as the strike and bad weather affected the crop late last year.
February 2007 tea production at 17.5 million kg was the lowest since the drought year of 1997 and down a massive 23% compared with the 2006 figure of 22.9 million kg.
Brokers Asia Siyaka Commodities said Ceylon tea production was likely to come back to normal levels only in May.
Apart from TTEL, Hayleys owns and manages Kelani Valley Plantations and together they produce 5% of Sri Lanka’s tea.