Sri Lanka’s Tea Smallholder Factories makes loss in June quarter

ECONOMYNEXT – Tea Smallholder Factories, which makes black tea from tea leaves bought from small farmers, slipped into the red in the June 2015 quarter as the prolonged slump in commodity prices took its toll. 

The firm made a loss of 326,000 rupees in the June 2015 quarter compared with a profit of 19.4 million a year ago, a stock exchange filing said.

Sales fell 18 percent to 516 million rupees during the quarter, said the firm in which John Keells Holdings has a 37.62 percent stake, Central Finance Company 22.85 percent and CF Growth Fund 6.45 percent. Top tea exporter Akbar Brothers has a 24.39 percent stake in Tea Smallholder Factories.

Tea Smallholder Factories’ net profit for the year ended 31 March 2015 had fallen to 36 million rupees from 81 million rupees the year before.

The company has been affected by the slump in tea prices owing to political instability and the crude oil price slump in key markets like Russia and the Middle East.

Tea Smallholder Factories is a so-called bought leaf factory, paying suppliers on a formula based on historical prices as a result of which it make losses when tea prices fall and profits when tea prices rise steadily.

(Correction – Correcting reference in third para to ownership of company.)
(Colombo/July 21, 2015)


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