ECONOMYNEXT - Sri Lanka's Hatton Plantations, which operates the tea business spun off from Watawala Plantations, reported a net loss of 79 million rupees in the September 2018 quarter.
The firm, which debuted on the Colombo Stock Exchange in February 2018, has sales of 756 million rupees in the quarter, according to interim results filed with the stock exchange.
The quarterly loss per share was 33 cents. Hatton Plantations had a loss per share of 10 cents in the six months to September 2018 with a net loss of 24 million rupees.
The stock last traded at 6.80 rupees Monday.
Before the separation of its tea business, Watawala Plantations had made a net profit of 366 million rupees in the September 2017 quarter with its tea business having a net profit of 76 million rupees.
Hatton Plantations is the segregated upcountry tea businesses of Watawala Plantations, with 17 tea estates and 11 processing factories.
Vish Govindasamy, Managing Director of Hatton Plantations, said its half-yearly performance was lower than expected.
“The loss is mainly due to the substantial reduction in crop and the drop in tea market, which resulted in reduced Net Sales Averages (NSA) achieved at the tea auctions in comparison to the previous year,” he said.
Other contributory factors were less number of day light hours as a result of the highest rain fall recorded in the last 10 years, issues relating to minimum residual levels (MRL) due to unavailability of weedicide, and drop in demand from Middle East, Russia and former Soviet Union countries.
The depreciation of the Sri Lanka rupee has had both positive and negative effects for the tea industry, Govindasamy said.
“Despite the challenges, HPL will continue to focus on quality with balanced nutrient intake to harness the best in quality parameters,” he said.
“Good agricultural practices put in place would ensure the retention of the tea plant’s liquoring characteristics together with its flavour and quality.”
Govindasamy said the crop at the beginning of the third quarter of the 2019 financial year has been in line with expectations.