Melstacorp Plc has recorded profit after tax of Rs. 6.25 billion for the financial year 2017/18. Group turnover reached Rs. 110 billion.
Company’s Chairman and Managing Director D. H. S. Jayawardena said the Group contributed Rs. 69 billion in taxes during the financial year for 2017/18.
“The beverage sector is the highest contributor to both the top line and the bottom line of the Group. Our main subsidiary DCSL PLC’s profitability dropped in the first three quarters managed to recover and record a net profit after tax of Rs. 4.35 billion,” Jayawardena told the shareholders in the company’s annual report for 2017/18.
Periceyl (Private) Limited, the second liquor company of the Group saw its profitability shrinking when compared with last year. The reduction of beer prices and a simultaneous increase in the hard alcoholic beverage prices have resulted in more consumers shifting to beer and other cheaper beverages, according to the annual report.
“The chairman said, the beverage sector of the group was subject to a severe challenge through higher increases in taxation in the last two years. A few years ago the Value Added Tax (VAT) on liquor was removed by adding a corresponding sum to excise duty,” he said.
“In the pursuing year VAT was re-introduced for liquor without a corresponding adjustment in the excise duty. Reintroduction of VAT together with a huge increase in duty on imports of main ingredient, ethanol and higher excise duty on hard alcoholic beverages resulted in a substantial increase in consumer prices.”
“As a result there was a notable decline in volumes. For the year under review the beverage sector revenue reached Rs. 97 billion and the net profit for the year was Rs. 4.7 billion,” he said.
Commenting on plantation sector performance he said that year 2017 was a better year for the tea industry with an increase in production and auction averages reached all-time high levels. However, despite the ascent witnessed in 2017, the Industry continued to be plagued with geo-political tension in the tea importing countries, policy decisions which affected the production of tea and temperature variability due to climatic changes.
The ban of glyphosate (which was recently eased) that is used for weed control, and curtail of tea imports by Russia, the largest importer from Sri Lanka too, caused much uncertainty towards Industry growth.
The negative impact of a drought and floods in the first and second quarters of the year coupled with high cost of fertilizer were drawbacks in reaching the production levels of the preceding years.
The reluctance to undertake the required level of annual replanting by most of the smallholder farmers and the plantation companies due to the non-affordability of the required inputs, and uncertainty in recovering investments is also a major contributory factor for the declining trend in the production volumes.
“In analyzing the global supply scenario, a deficit in production was evident from a few key producer countries mainly of CTC teas and this global shortage in production was a key factor for the prices to sustain at these levels coupled with strengthening of oil prices which favoured some key importing countries of Sri Lankan Teas.”
Company’s Chairman and Managing Director D. H. S. Jayawardena said the Group contributed Rs. 69 billion in taxes during the financial year for 2017/18.
“The beverage sector is the highest contributor to both the top line and the bottom line of the Group. Our main subsidiary DCSL PLC’s profitability dropped in the first three quarters managed to recover and record a net profit after tax of Rs. 4.35 billion,” Jayawardena told the shareholders in the company’s annual report for 2017/18.
Periceyl (Private) Limited, the second liquor company of the Group saw its profitability shrinking when compared with last year. The reduction of beer prices and a simultaneous increase in the hard alcoholic beverage prices have resulted in more consumers shifting to beer and other cheaper beverages, according to the annual report.
“The chairman said, the beverage sector of the group was subject to a severe challenge through higher increases in taxation in the last two years. A few years ago the Value Added Tax (VAT) on liquor was removed by adding a corresponding sum to excise duty,” he said.
“In the pursuing year VAT was re-introduced for liquor without a corresponding adjustment in the excise duty. Reintroduction of VAT together with a huge increase in duty on imports of main ingredient, ethanol and higher excise duty on hard alcoholic beverages resulted in a substantial increase in consumer prices.”
“As a result there was a notable decline in volumes. For the year under review the beverage sector revenue reached Rs. 97 billion and the net profit for the year was Rs. 4.7 billion,” he said.
Commenting on plantation sector performance he said that year 2017 was a better year for the tea industry with an increase in production and auction averages reached all-time high levels. However, despite the ascent witnessed in 2017, the Industry continued to be plagued with geo-political tension in the tea importing countries, policy decisions which affected the production of tea and temperature variability due to climatic changes.
The ban of glyphosate (which was recently eased) that is used for weed control, and curtail of tea imports by Russia, the largest importer from Sri Lanka too, caused much uncertainty towards Industry growth.
The negative impact of a drought and floods in the first and second quarters of the year coupled with high cost of fertilizer were drawbacks in reaching the production levels of the preceding years.
The reluctance to undertake the required level of annual replanting by most of the smallholder farmers and the plantation companies due to the non-affordability of the required inputs, and uncertainty in recovering investments is also a major contributory factor for the declining trend in the production volumes.
“In analyzing the global supply scenario, a deficit in production was evident from a few key producer countries mainly of CTC teas and this global shortage in production was a key factor for the prices to sustain at these levels coupled with strengthening of oil prices which favoured some key importing countries of Sri Lankan Teas.”
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