Jan 27, 2016 (LBO) – Sri Lanka’s Watawala Plantations PLC reported net profit of 439 million rupees for the nine months to 31 December 2015, up seven percent, on profits from palm oil and lower outlay on taxes despite losses in the tea and rubber production sectors.
Net profit for the quarter was up 21 percent to 176.8 million rupees. The revenue for the nine months fell to 4.6 billion rupees, a drop of 13 percent, compared with the previous year.
The company said the palm oil segment registered a revenue decline of 4 percent to reach 1,179 million rupees.
“The negative growth in revenue is primarily due to the reduction in crop hence Crude Palm Oil (CPO) production, while Net Sale Average marginally contracted compared to the corresponding period last year, consequent to a drop in global palm oil prices,” V. Govindasamy, the managing director said.
Nevertheless, the segment made a contribution to company’s profitability, with a net profit of 558 million rupees for the nine months, compared with 619 million in the same period last year.
Tea segment reported a revenue of 2.9 billion rupees in the nine mnoths, compared with 3.6 billion rupees recorded in the previous year. The net loss for the period was 213 million rupees compared with net loss of 253 million rupees in the previous year.
“The decline in the tea sector performance is attributed to the decrease in production YoY,” he said.
The rubber segment which accounted for 0.9 percent of total revenue reported a net loss of 36 million rupees compared to 63 million rupees loss the previous year. Losses were curtailed by the reduction of the rubber extent, Govindasamy said.
The company said net profit on exports was 47 million rupees for the nine months.
“The profit was mainly derived from the export of value added tea and herbs to Australia and USA while bulk tea shipments to Russia, Pakistan, India and UK had also contributed to revenue.”
In terms of outlook, the company continues to enhance the quality of its teas in order to gain a price advantage, while continuing to increase the palm oil yield, Govindasamy said.
“Biennial wage negotiations are currently underway as the collective agreement between the Plantation Companies and Trade Unions lapsed on 31st March 2015.”