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Sunday, 24 May 2009

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KVPL's profits slump as drought prevails

The combined impact of a massive shortfall in its tea crop and a sharp decline in the prices of rubber has depressed turnover and profit at Kelani Valley Plantations PLC (KVPL) in the first quarter of 2009, the Dipped Products Group plantation company has reported.

According to results released to the Colombo Stock Exchange this week, the turnover for the three months ending March 31, 2009 declined by 43 per cent to Rs 489.8 million, resulting in KVPL sustaining a net loss of Rs 46.6 million for the period.

The principal cause for this result was a 42 per cent drop in tea production as a consequence of the severe drought that prevailed in the period reviewed, which converted to Rs 200 million in revenue terms.

Rubber production declined 11 per cent, and prices for this commodity dropped sharply over the corresponding quarter of last year, resulting in revenue from rubber declining by Rs 160 million or 49 per cent, the company said.

In the year ending December 31, 2008, KVPL and its subsidiaries posted a turnover of Rs. 3,109 million, a growth of 10 per cent, with revenue from tea increasing by 13.6 per cent, and from rubber by 2.9 per cent.

Pre-tax profit for the year declined by 31 per cent to Rs. 300 million following the collapse of the commodity markets in the last quarter of the year.

Despite these setbacks, KVPL had continued to maintain its agricultural and other assets and intends to continue this practice, the company said.

Substantial investments have been made in recent years on replanting, upgrading factory buildings, machinery and other infrastructure. Kelani Valley Plantations manages 27 estates with an extent of more than 13,000 hectares, divided almost equally into tea and rubber.

All of the company's black tea producing factories have been certified as compliant with HACCP, ISO 22000:2005 and SGS-TASL product quality standards, ensuring that the teas they manufacture meet the highest required international food safety standards.

 

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