Watawala profits dip to Rs.434 million for FY14
View(s):Watawala Plantations PLC reported revenue of Rs.6.2 billion for the year ended 31 March 2014 (FY14), up 14.9 per cent YoY. Net profit declined to Rs.434 million for FY14, from RS.725 million recorded in the previous year, the company stated in a media reease.
The overall decline in YoY PAT is mainly attributed to the 20 per cent YoY wage hike that came into effect from April 2013, which increased the cost of production across all crops. Other income also contracted in FY14 to Rs.90 million, down 35.7 per cent YoY.
4QFY14 revenue stood at Rs.1.7 billion, up 35.2 per cent over the same quarter last year. PAT declined 9.3 per cent YoY to stand at Rs.123 million. The growth in revenue for 4QFY14 came on the back of higher volumes for both palm oil (+7.2 per cent YoY), and tea (+2.3 per cent YoY), the company explained.
Palm Oil segment registered a revenue growth of 5.2 per cent YoY to reach Rs.1.4 billion in FY14, which accounted for 22.3 per cent of the company’s revenue during the year. The Crude Palm Oil (CPO) production, the key contributor to company profitability, grew 9.0 per cent YoY, having made a net profit of Rs.633 million for FY14, the release stated.
Tea , the largest revenue contributor which accounted for over 66.7 per cent of the total revenue, increased 13.9 per cent YoY to Rs.4.2 billion in FY14, mainly on the back of improved tea prices in FY14.
The increased volumes experienced during 2HFY14, on the back of favourable weather conditions, mitigated the crop loss experienced due to heavy rainfall during 1QFY14. Tea production was recorded at 9.93 million kg for FY14, which was slightly above the previous year’s production of 9.89 million kg.
The net loss from tea stood at Rs.277 million in FY14 compared to a profit of Rs.85 million previous year. The loss is mainly attributed to a 20 per cent YoY wage hike, effective from April 2013, which resulted in an increase of average production cost by Rs.38 per kg, it was noted. As a result, the total negative impact on cost of sales amounted to Rs.379 million for FY14.
Although this was common for all three crops, tea was the worst hit as it requires the most number of associates (workers) per hectare, the company noted.
The rubber segment which accounted for 2.7 per cent of the total revenue in FY14, experienced an 8.2 per cent YoY drop in revenue to Rs.169 million, from Rs.184 million recorded last year due to a decline in production by 8.3 per cent YoY, it was stated in the release.
The export sector recorded an improvement in revenue up by 91.5 per cent YoY to Rs.521 million from Rs.272 million last year on flat, the company noted.