Tea, rubber and palm oil give Watawala record profits

COMPANY RESULT: Watawala Plantations has reported strong profit growth in 2005-06, following good performances in all segments of operations.

In results released to the Colombo Stock Exchange this week, the makers of 'Zesta' reported that turnover had grown 5 per cent to Rs. 2,855 million, and pre-tax profit to Rs. 218.9 million.

Profit after tax at Rs. 204.4 million reflected a growth of 26.3 per cent.

Tea continued to be the main contributor to the company's revenue, accounting for nearly 63 per cent of total revenue. Despite a marginal drop in production volumes, a strong focus on quality improvements and marketing has been cited as the key factors in the success of this segment.

The company's Retail Marketing Division, responsible for the marketing of its flagship brands 'Zesta' and 'Watawala Kahata' achieved a 23 per cent increase in revenue in the year under review.

Record rubber prices and a noteworthy 14 per cent increase in Watawala's rubber crop despite bad weather conditions in the rubber growing regions contributed to a 29 per cent increase in revenue from the rubber sector.

The company's Net Sales Average (NSA) rose 12 per cent over the previous year. An impressive performance from the relatively newer and smaller Palm oil sector provided the icing on the cake for the company, with production reaching a record 7.3 million kg., an increase of 17 per cent over 2004-05. Watawala Plantations is the only company operating a palm oil processing facility in Sri Lanka.

Commenting on the results, Watalwala Plantations Chairman G. Sathasivam paid tribute to the company's partnership with Tatra Tea and the Tetley Group, the second largest global tea marketer.

"The very strong supply chain that has been established by this arrangement enabled our products and services to reach Tetley customers throughout the world, while continuing to serve as the local exporting and packaging arm of the Tetley Group," he said.

Based on the results of 2005-06, the Board of Directors of Watawala Plantations has declared a dividend of 12.5 per cent, payable in June 2006.

Earnings per share at Rs. 8.64 as of March 31, 2006 reflected an improvement of 26.3 per cent, while the net asset value per share, at Rs. 50.04 as of the same date was an improvement of 41 per cent.