MARKET DEVELOPMENT
Palm Oil Helps Watawala Shine
Palm Oil Helps Watawala Shine
12/08/2013 (The Nation) - Sri Lanka’s leading Agribusiness group, Watawala Plantations PLC (WATA) – a member of the Sunshine Enterprise last week said strong performance in Palm Oil had mitigated the severe loss in the Tea segment, which was largely driven by one of the worst weather conditions during the first quarter of the FY 2013/14. The Group’s revenue grew by 14% (YoY) to Rs.1.5 billion whilst Profit after Tax (PAT) declined to Rs.11.4 million, compared to a PAT of Rs.147.5 million posted during the same quarter last year.
The firm added that the increase in wages coupled with additional provision for gratuity which came into effect from April 1, 2013 through the new collective agreement signed between plantation companies and the trade unions has also had a significant impact on the cost of production across all crops.
“In a wage impact year, contrasting unhealthy weather pattern, which prevailed during the first quarter, was the most critical factor impacting profitability,” the company said in a statement.
“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 was 28 days and the rainfall was recorded at 1,212 mm,” the firm pointed out.
Tea sales grew by 13% to reach Rs.1.0 billion compared to LKR 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.
In contrast, however, it said that the production of palm oil grew by 14% YoY despite adverse weather conditions, a result of excellent agricultural practices which are in place today. Despite a 14% increase in production, Revenue increased only 4% due to fluctuating Crude Palm Oil prices. Palm Oil is the highest contributor to the Group’s profit, posting a profit of LKR 146 million against LKR 163 million during the same period last year.
The firm added that the increase in wages coupled with additional provision for gratuity which came into effect from April 1, 2013 through the new collective agreement signed between plantation companies and the trade unions has also had a significant impact on the cost of production across all crops.
“In a wage impact year, contrasting unhealthy weather pattern, which prevailed during the first quarter, was the most critical factor impacting profitability,” the company said in a statement.
“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 was 28 days and the rainfall was recorded at 1,212 mm,” the firm pointed out.
Tea sales grew by 13% to reach Rs.1.0 billion compared to LKR 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.
In contrast, however, it said that the production of palm oil grew by 14% YoY despite adverse weather conditions, a result of excellent agricultural practices which are in place today. Despite a 14% increase in production, Revenue increased only 4% due to fluctuating Crude Palm Oil prices. Palm Oil is the highest contributor to the Group’s profit, posting a profit of LKR 146 million against LKR 163 million during the same period last year.