KVPL turnover, profit growth in first half ‘08 strong

Higher tea production coupled with better prices for tea and rubber have generated strong revenue and profit growth in the six months ending June 30, for Kelani Valley Plantations PLC (KVPL).

In results released to the Colombo Stock Exchange this week, the company, which is owned and managed by Dipped Products, the Hayleys Group’s multinational hand protection business, has reported that turnover grew 34 per cent to Rs 1.7 billion. Profit after tax was up 71 per cent over the first half of the previous year to Rs 226 m.

The major contributor to revenue growth was tea, with a 22 per cent improvement in production and a 17 per cent increase in average prices, the company said. The increase in production was particularly visible because production in the corresponding half of 2007 was affected due to trade union action.

Rubber prices also reflected an improvement of 33 per cent over the first half of 2007, enabling a noteworthy contribution to turnover and profit despite lower production due to adverse weather conditions.

“These results are essentially market-driven,” KVPL Managing Director Kavi Seneviratne said.

“Production costs, however, continue to rise due to domestic inflation and rising fuel, energy and fertilizer costs. Should the strong auction prices ease, the plantation companies would come under serious pressure to maintain healthy margins.”

KVPL’s Earnings per share for the six months reviewed was Rs 6.54, an increase of 72 per cent over the Rs 3.80 for the corresponding half year.

Kelani Valley Plantations 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.