KVPL trying to improve performance following crippling strikes

Kelani Valley Plantations PLC (KVPL), the Hayleys Group plantation company has begun reducing the impact of a huge crop loss -- the result of the estate strike of November-December 2006 -- to improve on its first half performance.

According to figures released this week, KVPL has increased its turnover for the nine months ending September 30, 2007 to Rs 1,888 million, an increase of 5 per cent over the same period last year, through better prices for rubber and tea.

The company said its first quarter of the year ended with its tea crop in deficit by a third, but had at the end of the review period reduced this to a fifth through a partial catching up in the third quarter. However, weather-related crop losses in the review period take this figure to 962,000 kg, KVPL Managing Director Kavi Seneviratne was quoted as saying in a press release.

The partial recovery of the crop lost to trade union action combined with a 25 per cent improvement in tea prices over the corresponding nine months resulted in turnover from tea growing by 2 per cent to Rs 1,176 million. A 3.6 per cent increase in production and a 10.6 per cent improvement in the net sales averages for rubber boosted turnover from that produce by 11 per cent to Rs 725 million.

As a result of these gains, KVPL’s profit before tax of Rs 222 million for the first nine months of the current year represented a decline of 16 per cent. This compares favourably against the decline of 26 per cent at the end of the first six months. Similarly, the reduction of 17 per cent in profit after tax as at 30th September 2007 reflected an improvement over the 29 per cent reduction reported for the first half of the year, the statement added.

“We have still not completely recovered from the effects of last year’s estate strike, but these results are encouraging in the context of that setback and the steady rise in costs that have taken place over the past nine months,” Seneviratne said.

Wage increases that followed last year’s strike have cost the company an additional Rs 123 million up to the end of the third quarter, and the latest wage increase which takes effect on 1st November is likely to cost an additional sum of around Rs 80 million including gratuity provisions which would be reflected entirely in the final quarter, he disclosed.