Watawala Plantations records Rs. 1.5 b revenue in 1Q

Thursday, 1 August 2013 02:08 -     - {{hitsCtrl.values.hits}}

Sri Lanka’s leading agribusiness group, Watawala Plantations (WATA), a member of the Sunshine Enterprise, has posted a 14% growth in revenue (YoY) to report Rs. 1.5 billion for Q1 ending 30 June 2013 (FY 2013/14). Strong palm oil performance has mitigated the severe loss in the tea segment, which was largely driven by one of the worst weather conditions during the first quarter of FY 2013/14. WATA posted a PAT of Rs. 11.4 million, compared to a PAT of Rs. 147.5 million posted during the same quarter last year. In a wage impact year, contrasting unhealthy weather pattern, which prevailed during the first quarter, was the most critical factor impacting profitability. The wage increase, coupled with additional provision for gratuity, both of which came into effect from 1 April 2013, had a significant impact on the cost of production across all crops. Tea production was significantly affected by the continuous rains experienced in the upcountry area, resulting in a higher cost of production. During the quarter under review, in the Hatton/Watawala/Lindula regions, the average number of wet days recorded was 59 days and the rainfall was recorded at 1,950 mm. In comparison, for the same period last year (YoY), the wet days were 28 days and the rainfall was recorded at 1,212 mm. The production of palm oil grew by 14% YoY despite adverse weather conditions, a result of the excellent agricultural practices which are in place today. Despite a 14% increase in production, revenue increased by only 4% due to fluctuating crude palm oil prices. Palm oil is the highest contributor to the group’s profit, posting a profit of Rs. 146 million against Rs. 163 million during the same period last year. The present market for palm oil shows an improvement. The tea sales grew by 13% to reach Rs. 1 billion compared to Rs. 919 million recorded in the first quarter of 2012/13 backed by higher sales volumes recorded in the current season. The wage/gratuity impact along with the adverse weather conditions had a significant impact on the cost of production of tea. Thus, tea sector recorded a loss of Rs. 156 million as against the loss of Rs. 8.2 million for the same period last year. Rubber recorded a loss of Rs. 11.9 million in Q1 2013/14 compared to a profit of Rs. 1.1 million during the first quarter of the previous financial year. This was primarily due to lower production due to continuous rains, which prevailed from mid of May 2013. The productions of rubber dipped 39% YoY. The rubber prices have dropped by Rs. 53/kg compared to same period last year.