Agalawatte Plantations posts highest ever turnover

Agalawatte Plantations posted its highest ever turnover of Rs.1.32 billion and a net profit of Rs.90.3 million for 2006 which is a near three fold increase compared to 2005. Chairman Dr. Chris Nonis, in his annual statement, attributed this to the company's focus on product quality and strict financial discipline, while noting that the results would have been much better, if not for the cumulative adverse impact of the island-wide plantation sector ‘go slow’ campaign and strike; increased wages which came into effect in November; removal of the fertilizer subsidy; and escalating input costs.

The company posted a much improved Earnings per Share (EPS) of Rs.3.61 compared with the EPS of Rs.1.26 in 2005, while the turnover was 17 percent above 2005. Dr. Nonis has said that the overall macroeconomic outlook for 2007 is favourable to the plantation industry, with the Sri Lankan economy predicted to maintain its growth momentum and grow at 7.5 percent and inflation projected to moderate during the year.

“Although the global economy is facing a cyclical slow down in 2007, rubber consumption is expected to grow, largely fuelled by Asian demand, and natural rubber prices are forecast to remain at remunerative level,” he has said. He has said that low inventories in most tea importing countries and high oil prices would be expected to contribute to strong demand for Sri Lankan teas by the Middle East and the market scenario is projected to be buoyant through 2007.

Dr. Nonis said this year the company should also see a positive contribution from the major crop diversification project of oil palm in the company’s Kalutara estates, following the commissioning in January of the state of the art palm oil factory. The chairman has warned that the full impact of the wage increase granted with effect from November, will be felt in 2007, and will cost approximately Rs.60 million to the company. “In the context of the already high cost of production, the absence of a productivity linked wage regime will continue to hinder Sri Lanka’s global competitiveness, and pose a major challenge to the long term viability and sustainability of the plantation industry,” he noted.