March 11 (LBO) – Robust rubber prices have boosted after tax profits of Kelani Valley Plantations (KVPL) by 66 percent in 2006, while turnover grew by 21 percent, the company said. Kelani Valley Plantations Limited (KVPL), a subsidiary of Dipped Products Limited (DPL) says turnover grew to 2,330 million in 2006, with increases of 11 per cent from tea and 44 per cent from rubber, despite drops in production in the last two months of the year as a result of trade union actions over wage negotiations.
KVPL’s profit before tax of Rs 291 million was made possible by an increase in the average prices of rubber at the Colombo auctions in the year under review while after tax consolidate profits grew 66 per cent to Rs 256.6 million.
Mabroc Teas, an associate company engaged in marketing of tea, contributed 18.6 million to KVPL profits, the firm said in a statement.
The company has recommended a a first and final dividend of 35 per cent, as against 20 per cent paid in 2005.
KVPL says the estate”go-slow” and strike spanning a 30-day period in support of the wage negotiations seriously affected all Regional Plantation Companies.
“Division of opinion between the trade unions with regard to the quantum of wage increase prevented the companies from reaching an early settlement to the dispute, significantly depressing both tea and rubber outputs,” the company said.
“As a result KVPL’s tea production registered a decline of 6 per cent. Had normalcy prevailed during the latter part of the year, production would have exceeded that of the previous year.”
Rubber production however had been on par with that of 2005, despite exceptionally wet conditions in October and November 2006.
KVPL had also increased the quantity of bought latex by 15 per cent.
KVPL has spent 64 million in additional wager for 2006, is expecting to spend 200 million rupees more in 2007.
“To afford the wage settlement the Company would need to achieve a significant productivity increase, though agreement was not reached on this matter at the negotiations, along with a concurrent improvement in prices,” the company’s Chairman N. G. Wickremeratne said, in the statement.
“The work disruption in last quarter is likely to affect both volume and quality in the first quarter of this year. The paucity of quality Western teas in the first quarter could adversely affect buying patterns in the medium and long term, as buyers may be compelled to look to other producer countries for equivalent products.”
The firms expects rubber price to remain strong over the first half of the year with strong demand from Asian countries.
KVPL’s parent Dipped Products, the glove making division of Sri Lanka’s Hayleys Group had revenues of 7.2 billion rupees for the 9-months ended December 2006.