KVPL reports PBT of Rs 545 m

Despite losses in tea:

Kelani Valley Plantations PLC (KVPL) posted strong top and bottom line growth in the 12 months ending December 31, 2011.

Releasing its fourth quarter figures to the Colombo Stock Exchange, the Hayleys Group Plantation company reported profit before tax of Rs 544.6 million despite registering a loss in tea, achieving a growth of 53 percent over 2010. Net profit for the period was up 42 percent to Rs 463 million, while revenue grew 57 percent to Rs 6.1 billion due to consolidation of Mabroc Teas (Pvt) Ltd.

According to the audited income statement of KVPL for 2011, profit attributable to equity holders of the company improved by 43 percent to Rs 460.4 million.

Basic Earnings per Share increased from Rs 9.43 in 2010 to Rs 13.54 for the year reviewed. Having considered this performance, the Board of Directors of KVPL has proposed a first and final dividend of Rs 5.00 per share.

Describing 2011 as "a good year for KVPL" notwithstanding fluctuating tea and rubber prices and a substantial wage increase, Hayleys Chairman Mohan Pandithage said global pressures on commodity prices had "precluded what could have been an even better result for the year."

Pandithage also cautioned that the instability of commodity prices resulting from the continuing volatility in major markets, steadily increasing costs of all input materials, and the expectations of a large resident workforce for wage increases at predetermined intervals are issues of grave concern to the plantation industry.

Commenting on the company's performance in 2011, KVPL Managing Director Kavi Seneviratne said steadfast adherence to the business plan including capital investment of Rs 288 million on field development, obtaining Rainforest Alliance Certification for all the company's tea processing centres and 19 tea gardens and an increase in tea and rubber crops enabled KVPL to face the challenges posed during 2011.

Among these challenges was an additional expense of Rs 250 million attributable to the wage increase from April 2011 and the related gratuity adjustment. This wage increase translates to an additional annual expenditure of Rs 340 million to KVPL. The company also had to contend with the decline of the tea market from the end of the second quarter of the year and lower rubber prices in the final quarter of 2011.

Kelani Valley Plantations manages 27 estates, over 13,000 hectares in extent, divided almost equally into tea and rubber.

All of the company's black tea producing factories have been certified as HACCP and ISO 22000-2005 compliant with regard to product and quality standards, ensuring that the product meets the highest international food safety parameters.