Kelani Valley reduces losses
An improvement of commodity prices and crop volumes in the fourth
quarter enabled Kelani Valley Plantations PLC (KVPL), the plantation
subsidiary of Dipped Products PLC, to end 2009 on a hopeful note.
According to figures released to the Colombo Stock Exchange for the
year ending December 31, 2009, KVPL, which reported a loss before tax of
Rs 215 million at the end of its first nine months, has reduced this
loss to Rs 28 million at the end of the year, recouping Rs 187 million
in its final quarter.
A year in which a worker wage increase determined in September with
retrospective effect from April added Rs 350 million to KVPL's
operational expenditure, 2009 was also characterised by substantial crop
losses due to erratic weather, resulting in the company's tea and rubber
crop declining by 19 per cent and 14 per cent respectively. Combined
with poor commodity prices in the first quarter, this reduced production
resulted in turnover for the year declining by 9 per cent to Rs 2,860
million, and the company posting a loss after tax of Rs 40 million.
Commenting on these results, KVPL and Hayleys Group Chairman Mohan
Pandithage said: "With worker wages constituting around 60 per cent of
operational expenses, the industry's future viability depends on wage
increases being reciprocated, at least in part, by concomitant
productivity improvements."
Analysing the prospects for the company, he said: "As long as oil
prices sustain current levels, rubber prices may reasonably be expected
to remain firm, and the improved buying power of the oil producing
countries will keep tea prices, particularly of the low grown and
associated varieties buoyant."
Pandithage however cautioned that "this market stability relies
heavily on the delicate balance of several factors, including economic
and political, which as the industry has frequently experienced to its
detriment, are subject to sudden decline."
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