Wage hike sends KVPL in to the red in 3Q '09

The recent estate wage hike has eroded the gains of the second quarter of Kelani Valley Plantations PLC (KVPL) and saddled the Dipped Products Group's plantation company with a net loss of Rs 220.8 million for the nine months ending September 30, 2009.

The full impact of the wage increase implemented in September with retrospective effect from April 1, 2009 on the company's bottom line for the period reviewed was Rs 290 million, inclusive of back wages and gratuity provisions, the company said. In addition, substantial crop losses in tea and rubber due to adverse weather conditions during much of the period resulted in lower revenue from the company's principal commodities and exerted further pressure on the bottom line, the company said.

In results released to the Colombo Stock Exchange, KVPL reported that turnover declined 26 percent to Rs 1,863 million at the end of the third quarter from Rs 2,522.6 million for the corresponding nine months of last year. The company posted a loss before tax of Rs 215 million for the period reviewed.

KVPL's tea production volume fell by 25 percent in the nine months under review whilst rubber production declined by 15 percent, KVPL Managing Director Kavi Seneviratne said.

The reduced production coupled with lower prices for these commodities resulted in revenue from tea falling 16 percent to Rs 1,357.6 million, and revenue from rubber declining 48 percent to Rs 478.5 million, he said.