Watawala Plantations PLC reported robust revenues and profits for the three months ended June 30, 2020 (1Q21) as the company’s palm oil and dairy businesses stood to benefit from the circumstances that were created by the pandemic where the focus increasingly shifted toward scaling up local production and import substitution.
Both palm oil and dairy makes integral segments of the country’s broader agriculture sector, which was made an essential service by the government as feeding the nation became a top priority during the pandemic when the global supply chains were disrupted.
The company majoring in palm oil said its revenues increased from the shift in the yield curve and improvements made to the fertiliser regime, while its fledgling dairy segment became a beneficiary of the milk price increase and fresh milk consumption.
“Over the next few months, agribusiness sector will continue at optimum scale of operations and support local production and import substitution in this time of need for the nation,” stated Binesh Pananwala, the Chief Executive Officer of the company.
The company reported consolidated revenue of Rs.973.6 million for the quarter under review, up 11 percent from the comparable period last year.
Further, the company reported earnings of Rs.2.00 a share or Rs.406.3 million for the quarter compared to Rs.1.29 a share or Rs.275.1 million in the year earlier period.
The company’s palm oil business was challenged by the change in regulations surrounding the crop’s cultivation in early 2020, which inhibited its planting programme. However, the company engaged with the government to get a clear direction on the regulation pertaining to the local palm oil industry.
Palm oil is a close substitute for coconut oil and is being used for cooking and manufacturing of confectionaries.
Despite reporting higher revenues and profits, the sector came under some pressure during the lockdowns as it operated at sub-par levels due to labour shortages at the height of the pandemic.
The company expects the volatility in the global palm oil market to have some bearing on the NSA for the palm oil segment during the next quarter.
Meanwhile, Watawala Dairy Limited, the firm’s dairy arm, increased its revenues and returned to an operating profit for the first time. The company attributed it to better milk prices and stringent cost optimisation measures.
The company cut its net losses to Rs.969, 000 from Rs.64.3 million in the same period last year.
The company is observing an increase in demand for fresh milk in Sri Lanka.
“The dairy segment will further consolidate its operations with better prices, due to the increase in demand for fresh milk in Sri Lanka. Furthermore, the segment will focus on rationalizing feed costs, and increasing the milk yields,” Pananwala added.
On May 12, Estate Management Services Private Limited which had 74.24 percent stake in Watawala sold its entire stake to Sunshine Wilmar (Pvt) Limited at Rs.20 a share.
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