Tax reversal helps Tea Smallholders’ 3Q

Tea Smallholder Factories PLC has returned to the black during the December quarter (3Q19), as the company saw its earnings for the period rising 47 percent year-on-year (YoY) to Rs.13.7 million, thanks to a Rs.8.9 million tax reversal.

The earnings per share (EPS) for the period improved to 46 cents from 31 cents a year ago.

The revenue for the period fell 27 percent YoY to Rs.481.2 million. The gross profit fell 36 percent YoY to Rs.13 million. The modest growth in production and the higher prices fetched at tea auctions last year by Ceylon tea helped the John Keells Holdings subsidiary to report positive results during the financial year ended in March 31, 2018. 

The fortunes of the company as well as the tea industry change on production, prices and worker wages are not linked 
to productivity.

Meanwhile, for the nine month ended December 31, 2018, the company reported a net loss of Rs.15.1 million against a net profit of Rs.54.5 million a year ago.
The top line fell 21 percent YoY to Rs.157 billion.

The loss per share for the period was 50 cents against an EPS of Rs.1.82.

Tea Smallholder Factories PLC, which makes black tea from leaves bought from small farmers, operates seven factories in Galle, Ratnapura and Ginigathhena and caters to a green leaf supplier base of over 17, 600, which accounts for 5.8 percent of the total tea smallholders registered in Sri Lanka.

John Keells Holdings has 37.63 percent of the issued shares of the company while Akbar brothers as the second largest shareholder has 24.39 percent. Central Finance Company PLC also has 22.85 percent stake in Tea Smallholders PLC.