Oil palm boosts Watawala Plantations 2Q profits

29 October 2015 02:44 am - 0     - {{hitsCtrl.values.hits}}

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Sunshine Holdings PLC’s plantation subsidiary Watawala Plantations PLC posted a net profit of Rs.131.08 million for the second quarter ended September 30 (2Q16), representing a 320 percent increase year-on-year (YoY), with the oil palm sector coming for a bail out. Earnings per share increased to Rs.0.55 from Rs.0.13 YoY.
The group’s top-line contracted 13 percent YoY to Rs.1.57 billion, while the cost of sales too declined 21 percent YoY to Rs.1.33 billion, resulting in gross profits increasing 107 percent YoY to Rs.235.64 million. Other operating income decreased 58 percent YoY to Rs.16.58 million, while administrative expenses fell 15 percent YoY to Rs.76.26 million, leading to an operating profit of Rs.175.96 million, showing a 174 percent increase YoY.
For the six months ended September 30 (1H16), net profits declined marginally to Rs.261.63 million from Rs.262.14 million, with revenue declining 12 percent YoY to Rs.3.25 billion and cost of sales falling by the same amount YoY to Rs.2.81 billion.
For 1H16, palm oil buoyed group performance, with sector net profits of Rs.436.55 million, up 4 percent YoY. The sector revenue increased 5 percent YoY to Rs.865.58 million, while cost of sales increased 4 percent YoY to Rs.356.38 million. 
The tea segment posted a net loss of Rs.242.99 million in 1H16, worsening 22 percent YoY due to the global economic landscape and high wages.  Tea revenue fell 22 percent YoY to Rs.1.96 billion, while cost of sales fell 19 percent YoY to Rs.2.05 billion.
The rubber segment’s net losses for 1H16 eroded a further 32 percent YoY to Rs.27.99 million due to inclement weather.  Revenue fell 29 percent YoY to Rs.28.42 million while cost of sales also fell 29 percent YoY to Rs.44.65 million. 
Experts say the rubber industry will continue to fall in coming years.
Net profits from export operations increased 160 percent YoY to Rs.32.51 million possibly through the weakened rupee, with revenue increasing 33 percent YoY to Rs.401.70 million and cost of sales increasing 28 percent YoY to Rs.365.04 million.
The group appears to be shedding off costs in the loss-making entities, with administrative costs for tea declining to Rs.97.24 million in 1H16 from Rs.115 million YoY, and to Rs.7.02 million from Rs.11.47 million YoY for rubber. 
Administrative costs for oil palm increased to Rs.54.52 million from Rs.43.97 million YoY.
Company officials in the recent past have said that oil palm will be the main revenue generator for the plantation sector, with companies which have not diversified from tea and rubber set to make losses.
The group’s total assets decreased to Rs.7.21 billion in 2Q16 from Rs.7.32 billion in 1Q16. 
Equity increased to 4.44 billion from Rs.4.42 billion through retained earnings, while long and short-term borrowings fell to Rs.317.47 million from Rs.378.69 million in the same period. Plantations made up the largest revenue segment of Sunshine Holdings in 1Q16.
 
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