Palm oil props up Sri Lankaâ€™s Watawala Plantations September profit
ECONOMYNEXT – Sri Lanka’s Watawala Plantations said September 2015 quarter net profit shot up 320 percent to 131 million rupees from a year ago with profits from palm oil and branded teas helping offset losses from tea and rubber production.
Sales fell 13 percent to 1.6 billion rupees in the quarter but the firm also managed to cut costs sharply, according to interim accounts filed with the Colombo stock exchange.
Earnings per share for the September 2015 quarter rose to 55 cents from 13 cents the year before.
EPS for the six months ended September 2015 were stagnant at 1.11 rupees.
Watawala Plantations Managing Director Vish Govindasamy said 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.
The palm oil business made a “significant contribution” to company profitability, he said in a note accompanying the results.
Palm oil, which has import tariff protection, made a net profit of 436 million rupees for the September 2015 quarter compared to 421 million rupees in the same quarter last year.
Palm oil revenue grew only five percent to reach 865 million rupees in the September 2015 quarter from the year before mainly due to the increase in Crude Palm Oil production, Govindasamy said.
“The Net Sale Average marginally contracted compared to the corresponding period last year, consequent to a drop in the global palm oil prices.”
Losses in Watawala Plantations’ tea business grew to 243 million rupees in the September 2015 quarter from a net loss of 200 million rupees in the same period last year.
Tea sales fell to 1.9 billion rupees from 2.5 billion rupees last year.
“The decline in the tea sector performance is mainly due to a decrease in production compared to the corresponding period last year while the NSA has been maintained flat at the previous year’s level,” Govindasamy said.
“The initiatives taken to improve the quality of its teas has helped to maintain the NSAs at the previous year level although a sharp drop was reported in the Colombo tea auction.”
Net profit from exports, mainly of value added teas, rose to 32 million rupees in the September 2015 quarter from 12 million rupees the year before with sales rising to 362 million rupees from 255 million rupees last year.
(Colombo/October 26 2015)