ECONOMYNEXT – Sri Lanka’s Watawala Plantations said December 2016 quarter net profit rose 163% to Rs466 million from a year ago helped largely by sharp gains in palm oil sales and prices.
Group sales grew 5% to Rs1.4 billion during the period, according to interim accounts filed with the stock exchange.
Earnings per share for the December quarter were Rs1.97 compared with 75 cents the year before.
Palm oil business profits rose to Rs238 million from Rs122 million a year ago while the tea sector profits rose to Rs194 million from Rs30 million.
EPS for the nine months to December 2016 rose to Rs4.28 from Rs1.85 the year before with sales up 03% to Rs4.7 billion.
Watawala Plantations Managing Director Vish Govindasamy said the palm oil segment grew 47% to reach Rs1.7 billion.
“The growth in revenue is primarily driven by price and volume growth of 25% and 19% respectively,” he said. “The segment made a significant contribution to the profitability of the company, recording a net profit of Rs979 million for the nine month period.”
But he warned: “We see some negative impact on selling price of Crude Palm oil following the recent reduction in import duty by Rs20 a kilo.”
Tea segment sales fell 8% to Rs2.7 billion.
“However, currently the tea market is seen to be improving and as reported in the last quarter, the management continues to lead on the decision to change the tea sector strategy by driving through the perspective of quality instead of quantity,” Govindasamy said.
“This change of strategy has reaped benefit by gaining higher NSA over the last year and above the budget.”
The tea business faced many challenges and adverse weather conditions, which negatively impacted the business resulting in a crop loss of 1,325,010 kgs (18%) YoY, he said.
The net profit on exports fell 35% YOY mainly due to lower volume of business.
(COLOMBO, Jan 27, 2016)