COLOMBO (EconomyNext) – Sri Lanka’s Agalawatte Plantations said it will expand its oil palm business, profits from which helped reduce the impact of losses in its rubber and tea estates.
The firm, part of the Mackwoods Group, made a loss of 190 million rupees in 2014 compared with a profit of 14 million the year before with sales dropping by 8.3 percent to just over two billion rupees.
“Being predominantly a rubber company, the company’s total turnover dropped year-on-year notwithstanding turnover gains recorded by tea and oil palm,” Agalawatte Plantations chairman Chris Nonis said.
The company has been affected by the slump in commodity prices along with other regional plantations companies.
Nonis said the company’s investment in oil palm is continuing to bear results, with oil palm making a contribution to the company’s bottom line of 137.5 million rupees, up 10.5 percent from 124.4 million the year before.
Its attributable share of profit of its joint venture palm oil mill increased to 54.9 million rupees in 2014 from 40.3 million in 2013.
“Given the proven success of diversifying into oil palm, the company is in the process of consolidating and expansion of its oil palm hectarage,” Nonis told shareholders in the company’s annual report.
However, he noted that the company’s efforts have been hampered by constraints in importing of seed material.
“It is hoped that the importation process will be streamlined without delay, so that the planting programmes can be completed as planned.”
The report said oil palm continued to perform well in 2014 making the only positive contribution to the bottom line of the three major crops.
Oil palm production dropped 7.2 percent in 2014 from the year before.
But good prices offered for fresh fruit bunches by the JV palm oil mill, which increased by 12.7 percent, enabled the improvement in oil palm profitability, the report said.