ECONOMYNEXT – Sri Lanka’s Watawala Plantations Plc, which has interests in oil palm and cattle farming, that benefit from import duty protection, is expecting to return to profit as milk output increase in a dairy start up unit.
The firm made a marginal 6.8 million rupee loss in the March quarter on revenues of 566 million rupees as profits in oil palm was outweighed by diary losses.
Watawala spun off its tea unit which is more exposed to commodity price cycles and wage pressure in Hatton Plantations, and only small volumes of tea remain with the firm.
Managing Director Vish Govindasamy told shareholders that the start-up farm, Watawala Dairies now had 1,128 cows including 602 lactating milch cows.
The unit lost 90 million rupees, including depreciation.
"The loss is in line with the projected loss due to the lower milk yields at the commencement of the lactation cycle," Govindasamy told shareholders in interim accounts filed with the Colombo Stock Exchange.
Milk yields will go up in subsequent lactations, he said. A herd of 240 Australian cattle, which were added to the herd will also improve milk yields, he said.
Palm oil profits also fell he said.
"The lesser prices for crude palm oil compared to the previous year affected the profitability," he said.
"The lower prices were the result of the import duty revisions and the volatility of the crude palm oil prices in the world market.
"The profitability was also impacted by the provision of extra deferred tax of LKR 103 million, owing to the higher tax rate applicable consequent to the new Inland Revenue Act." (Colombo/May26/2018)