KVPL wipes off 1Q losses in 2Q ‘09

Continuous development of agricultural base and other assets helps sustain business:

Kelani Valley Plantations PLC (KVPL) has reduced its first quarter net loss of Rs. 46.6 million to a nominal loss of Rs. 5.3 million for the six months ending June 30, 2009.

The company recorded a post-tax profit of Rs. 41.3 million in the second quarter of the year, erasing the losses incurred in the drought hit first quarter, despite a decline of 30 percent in turnover in the period reviewed. Turnover for the six months was Rs. 1,163.9 million.

Spells of unusually adverse weather have resulted in significant volume reductions in both tea and rubber for the Dipped Products Group’s plantation arm, with declining rubber prices compounding the impact on both turnover and profit, as revealed by figures released last week to the Colombo Stock Exchange.

“The weather patterns in the plantation areas have been extremely erratic”, Managing Director, KVPL, Kavi Seneviratne said. “This resulted in a sharp reduction in projected tea crops, as well as a significant loss of tapping days in May and June in the rubber sector.”

KVPL’s tea production volume fell by 28 percent in the six months under review whilst rubber production declined by 12 percent, he disclosed. Coupled with a 43 percentdrop in rubber prices, the combined revenue from both commodities fell by Rs. 537.7 million. The average price of rubber in the first six months of 2009 was Rs. 128/- per kg less than the average for the corresponding half of 2008, Seneviratne said. \

“However, we are encouraged that the company has broken even despite adverse weather, low crops and poor rubber prices,” he said.

Seneviratne attributed this to critical inputs over the years, as well as stringent cost-saving strategies implemented in the current year, which have enabled the company to sustain itself in a particularly lean business period.

He said that despite fluctuating fortunes, KVPL has followed a consistent policy in developing its agricultural base and other assets, with substantial investments in re-planting, upgrading plant and machinery and improving other infrastructure.

Kelani Valley Plantations manages 27 estates, over 13,000 hectares in extent, divided more or less equally in to tea and rubber. All of the company’s black tea producing factories have been certified as HACCP, ISO 22000-2005.