In the first six months its turnover was flat at 1.2 billion rupees while profits fell 31 percent to 129 million rupees.
Wage and fertilizer costs have been rising, a company statement said.
Kelani Valley had lost a third of its tea production in the first quarter as it recovered from wage related strike action in December 2006.
Rubber production was slightly up and sale prices had strengthened 14 percent pushing rubber revenue up 18 percent to 481 million.
Managing Director Kavi Senevirante said average tea prices have also moved up 32 percent and the firm was expecting better results in the second half of the year.
Kelani Valley said it had been recognized by the United Nations Global Compact (UNGC) as a pioneer 'ethical tea' maker for its production practices.
It had also completed certification of black tea factories for HACCP, ISO 22000:2005 and TASL-S