Watawala Plantations PLC reported revenues of Rs. 3.7 b for the six months ended 30 September 2014 (1HFY15), up 27.9% YoY. Net profit or PAT for 1HFY15 amounted to Rs. 262 m, against Rs. 99 m in the same period last year. WATA was able to post strong bottom line performance in a challenging environment for the plantation sector.
Profit for the 2nd quarter (2QFY15) amounted to Rs. 31 m, down 64.2% YoY due to challenges in the tea sector.
Palm oil contributed Rs. 421 m to the group bottom line in 1HFY15 which helped WATA to cover its losses in the tea and rubber sectors. Profit for 2QFY15 alone amounted to Rs. 237 m, a growth of 26.4% YoY.
Revenue for 1HFY15 amounted to Rs. 822 m, up 7.4% YoY. The growth in revenue is attributed to 5.7% YoY increase in crop which amounted to 4.62m kg, and an 11.2% YoY increase in NSA. The average NSA for 1HFY15 was Rs. 179 per kg. The increase in crop is attributed to better yield as a result of good agri practices, and new fields yielding FFB. Palm oil revenue for 2QFY15 amounted to Rs. 445 m, up 9.2% YoY.WATA continues to be the single biggest CPO producer in Sri Lanka.
The tea segment, the largest revenue contributor which accounted for over 68.3% of total revenue, increased 37.8% YoY to Rs. 2.5 b in 1HFY15, mainly on the back of improved volumes. Weather conditions were favorable for tea during 1QFY15, but not so much in 2QFY15. For 1HFY15, own crop was up 17.8% to 3.31m kg, and bought crop increased 30.3% YoY to 1.98m kg. The NSA for 1HFY15 stood at Rs. 396 per kg, down 2% from same period last year. Instability in key export markets such as CIS, and the Middle East has put pressure on auction prices. For 1HFY15, the tea segment had made a loss of Rs. 199 m, compared to a loss of Rs. 234 m in 1HFY14.
Meanwhile, 2QFY15 has been a very challenging period with production volumes being affected by inclement weather and NSA being hit by weak demand at the auction. 2QFY15 loss of Rs. 231 m has completely erased the 1QFY15 profit of Rs. 32 m. Revenue for 2QFY15 amounted to Rs. 1.2 b, up 54.7% YoY. WATA remains the largest single tea producer in Sri Lanka.
The export sector recorded a significant improvement in revenue driven by value added teas sold at a higher price, compared to mainly bulk orders in 1HFY14. Enhanced volumes on herbs and black teas have contributed towards revenue of Rs. 302 m in 1HFY15, up 36.6% YoY. PAT on export amounted to Rs. 13 m in 1HFY15, against Rs. 11 m recorded in the same period last year.
The rubber segment was hard hit by the 25% YoY dip in average NSA which stood at Rs. 271 per kg in 1HFY15 compared to Rs. 363 per kg in 1HFY14. Revenue was further impacted by a 30% YoY drop in volumes. Cultivation extent of rubber was reduced by 19% from 652 ha in 1HFY14 to 521 ha in 1HFY15. The increase number of wet days