KVPL Turnover up in ’08

A decline in tandem of prices of tea and rubber in the final quarter of 2008 has taken the shine off the full year performance of Kelani Valley Plantations PLC (KVPL).

In results released to the Colombo Stock Exchange the company which is owned and managed by the Hayleys Group’s multinational rubber glove manufacturing group Dipped Products PLC, has reported that turnover for the year ending December 31, 2008 grew 10 per cent to Rs 3,109 million. However, net profit before tax declined 31 per cent to Rs 300 million, while profit after tax fell 32 per cent to Rs 278.7 million.

Reviewing these results, Hayleys Group Chairman N. G. Wickremeratne said KVPL would have ended 2008 with a far more attractive bottom line if not for the highly detrimental impact of the global financial collapse on commodity trading.

“The year under review commenced on a promising note and, apart from minor seasonal fluctuations, tea prices maintained healthy levels with prices overall being considerably higher than 2007, till the end of the third quarter,” he said. “October saw a complete reversal with sale averages declining to a two-year low and an accumulation of a large proportion of unsold catalogued volumes by end November.

This coupled with a similar downturn in rubber prices severely eroded profit margins,” Wickremeratne said.

Turnover growth was derived from both tea and rubber, which recorded increases of 13 per cent and 3 per cent contributing Rs. 1,966 million and 1,091 million and accounting for 63 per cent and 35 per cent of total turnover.

Profit attributable to equity holders of the company declined 33.5 per cent to Rs 275.8 million from Rs 415 million in 2007, which was the best year in the company’s history.

Based on these results, the Board of Directors of KVPL PLC proposed a total dividend of Rs. 3.50 for 2008, as against Rs 5.50 per share in 2007. Capital expenditure during the year was substantial, with investment focusing on renewal of the crop asset base, upgrading of plant and machinery, implementation of energy saving measures in the manufacturing process and to enhance the product range and manufacturing flexibility, Wickremeratne said.

A major portion of the outlay was absorbed by rubber and tea replanting followed by plant and machinery upgrades, which included the purchase of five Colour Separator units incorporating the latest technology.

Expenses were also incurred on the new effluent treatment plants as well as on the rehabilitation of existing effluent treatment systems to ensure that effluent discharged is in full compliance with the stringent standards mandated by the Central Environmental Authority.

Improvements to worker housing and other related aspects under the company’s ‘A Home for Every Plantation Worker’ program also received allocation of funds, he said. A highlight of the year was the accreditation of all 19 tea plantations of the company as GLOBAL G.A.P compliant, by SGS-New Zealand.