KVPL post-tax profit climbs to Rs. 158m in 1Q

An improved contribution from the tea sector has enabled Kelani Valley Plantations PLC (KVPL), the plantation company of Dipped Products PLC, the Hayleys Group's multinational hand protection business to post a 147 per cent increase in post-tax profit in the three months ending March 31, 2008.

According to figures released to the Colombo Sock Exchange this week, the company's post tax profit grew to Rs 158 million from Rs. 64 million in the corresponding quarter of 2007, while pre-tax profit rose by 140 per cent to Rs 162 million in the same period. Turnover increased to Rs 852 million from Rs 604 million, an increase of 41 per cent. Turnover from tea and rubber increased by 58 per cent and 19 per cent respectively, contributing to this growth.

Commenting on the company's performance, KVPL Managing Director Kavi Seneviratne said: "We are encouraged by the quarter's results, especially in the context of increased costs of inputs and high inflationary conditions."

He said the tea sector which recorded an operating loss during the same period last year had shown a satisfactory improvement to reflect a six fold increase. "The rise in prices was mainly driven by the shortfall in Kenyan production due to the political turmoil in that country.

The positive impact on price compensated for the shorter quality season experienced during the first quarter," Seneviratne said. He also pointed out that the significant improvement in tea production in the first quarter stems from the poor production of last year consequent to the work stoppage in late 2006.

Rubber production fell marginally during the period under review due to unfavourable weather conditions. However, operating profit from rubber improved due to stronger prices, Seneviratne said disclosing that although profit from rubber increased by only 7 per cent, it constituted 60 per cent of the operating profit.

Kelani Valley Plantations was incorporated in 1992 and manages 27 estates with an extent of more than 13,000 hectares, divided almost equally in to tea and rubber. All of the company's black tea producing factories have been certified 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.