ECONOMYNEXT – Sri Lanka’s Watawala Plantations, which has spun off its tea business, said net profit fell almost 12 percent to 336 million rupees in the September 2018 quarter from a year ago.
Earnings per share were 1.67 rupees for the quarter with sales down 51 percent to 867 million rupees, according to interim accounts filed with the stock exchange.
Profits from palm oil were higher while losses in the new dairy business narrowed.
Watawala Plantations share closed at 21.50 rupees Thursday, down 50 cents or 2.38 percent.
In the six months to September 2018, EPS fell to 2.49 rupees from 3.20 rupees a year ago with profits from palm oil slightly lower and losses in the dairy business higher.
Watawala Plantations Managing Director Vish Govindasamy said earnings were supported by higher production volumes in the second quarter.
“Global palm oil prices declined in response to the supply side factors, which affected the local price,” he said in a note accompanying the accounts.
“However, this was negated owing to the upward revisions of duty on crude palm oil imported to the country.”
Watawala Dairy Limited showed signs of recovery in the second quarter compared with the first as the milk volume, prices and revenue increased significantly, resulting in a reduction in operating losses, Govindasamy said.
The loss for the second quarter fell to 25 million rupees from a loss of 45 million rupees in the previous quarter, with the total loss being 70 million for the six months ended 30 September 2018.
“These start-up losses, now within the budgeted parameters, are regularly monitored and controlled,” Govindasamy said.
“Increased milk production from the cattle coming to the second lactation in the herd and the first lactation of 246 cattle imported from Australia in May 2018 mainly accounted for the volume increase.”
Govindasamy said the volatility in the global oil palm market will remain and the strengthening of the US dollar against rupee will have mixed consequences for the industry.
The dairy business will further consolidate its operations with more focus on rationalizing feed costs with the milk yields, he said.