Watawala Plantations PLC (CSE: WATA) reported revenues of LKR5.3bn for the nine months ended 31 Dec 2014 (9MFY15), up 16.6% YoY. Net profit or PATfor 9MFY15 amounted to LKR409m, against LKR311m in the same period last year.WATA was able to post strong bottom line performance in a challenging environment for the plantation sector due to better than expected performance in Palm Oil.
Profit for the 3rd quarter (3QFY15) amounted to LKR147m, down 30.9% YoY due to challenges in the Tea sector which was adversely affected by heavy rains.
Palm Oil contributed LKR593m to the group bottom line in 9MFY15 which helped WATA to cover its losses in the tea and rubber sectors. Profit for3QFY15 alone amounted to LKR172m, agrowth of 23.2% YoY.
Revenue for 9MFY15 amounted to LKR1.2bn, up 9.1% YoY. The growth in revenue is attributed to 6.3% YoY increase in crop which amounted to 6.94m kg, and a19.9% YoY increase in NSA. The average NSA for 9MFY15 was LKR163 per kg. We attributes the increase in crop to better yield as a result of Good Agri Practices, and new fields yielding Fruit. Palm Oil revenue for 3QFY15 amounted to LKR404m, up 12.7% YoY.
Tea segment, the largest revenue contributor which accounted for over 67.9% of the total revenue, increased 22.4% YoY to LKR3.6bn in 9MFY15, mainly on the back of improved volumes. Weather conditions were favorable for tea during 1QFY15, but not so much in 2QFY15 and 3QFY15.For 9MFY15, own crop was up 7.6% to 4.98m kg, and bought crop increased 11.7% YoY to 2.96m kg. The NSA for 9MFY15 stood at LKR403 per kg, down 3.6% from same period last year. Instability in key export markets such as CIS, and the Middle East has put pressure on auction prices. For 9MFY15, the Tea segment had madea loss of(LKR210m), compared to a loss of (LKR197m) in 9MFY14.
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