Mr Naresh Ratwatte Chairman HAPU & UDPL. Thank you very much for telling us the Truth.

It is bit unusual to see a chairman’s statement on a quarter report and more importantly, telling the truth is even more unusual in this kind of a statement. But on both HAPU & UDPL quarterly financial reports he (Naresh Ratwatte) frankly said what is happening in the plantation sector companies.
Following is the summary of chairman’s message on Hapugastenne Q2 report.

Naresh Ratwatte wrote: Revenue during the period declined by 8%, as a result of the drop in the production of tea during the first quarter and then a sharp drop in the price of Tea at the Colombo auctions during the second quarter. The increase in quantities on offer at the auctions during the second quarter, the political turmoil in the middle eastern countries and the strengthening of the Sri Lankan Currency against the US $ did impact on the prices.
The wage increase of 27% effective from the 1st of April 2011, did impact on the results of the second quarter and is expected to cost the company an additional Rs. 550 Mn, which includes the increase in the provision for terminal benefits.

http://www.cse.lk/cmt/upload_report_file/708_1313056363466.pdf

& Udupussellawa plantations plc Q2 report he mentioned

Naresh Ratwatte wrote: The company recorded a loss of Rs. 43 Mn during the six months ending 30thJune 2011, against a profit of Rs. 90 Mn during corresponding period of 2010.
Revenue during the period declined by 10%, as a result of the drop in volume during the first quarter and then the sharp drop in the price of Tea at the Colombo auctions. The traditional Nuwara Eliya flavoury season failed due to unfavorable weather conditions. The prices of Nuwara Eliya Tea declined by over Rs.40/-compared to the same period of previous year. This had a significant impact on the results during the period under review.
The wage increase of 27% that was effective from the 1stof April 2011, did impact on the results during the second quarter and is expected to cost the company an additional Rs. 250 Mn, which includes the increase in the provision for terminal benefits..

http://www.cse.lk/cmt/upload_report_file/727_1313056303620.pdf

But a plantations lover in this forum continuously praised these plantation sector counters few months ago. It was not just one off but many many times. He gave a hell of lot examples & told many fairytales to us. If I can recall some of these are Low P/E, Low PBV, wage hike is negligible, timber sales, high tea/rubber prices etc. Simply he wanted us to think why we do not buy plantation sector shares.
No matter what I must say he’s a quite knowledgeable person but horribly went wrong with plantation sector calculations.
This plantation lover in this forum likes to say “ X “ results is out as I predicted but hes extremely quiet about these plantation sector companies results.


Overall......well said Naresh Ratwatta.

UKboy wrote:It is bit unusual to see a chairman’s statement on a quarter report and more importantly, telling the truth is even more unusual in this kind of a statement. But on both HAPU & UDPL quarterly financial reports he (Naresh Ratwatte) frankly said what is happening in the plantation sector companies.
Following is the summary of chairman’s message on Hapugastenne Q2 report.

Naresh Ratwatte wrote: Revenue during the period declined by 8%, as a result of the drop in the production of tea during the first quarter and then a sharp drop in the price of Tea at the Colombo auctions during the second quarter. The increase in quantities on offer at the auctions during the second quarter, the political turmoil in the middle eastern countries and the strengthening of the Sri Lankan Currency against the US $ did impact on the prices.
The wage increase of 27% effective from the 1st of April 2011, did impact on the results of the second quarter and is expected to cost the company an additional Rs. 550 Mn, which includes the increase in the provision for terminal benefits.

http://www.cse.lk/cmt/upload_report_file/708_1313056363466.pdf

& Udupussellawa plantations plc Q2 report he mentioned

Naresh Ratwatte wrote: The company recorded a loss of Rs. 43 Mn during the six months ending 30thJune 2011, against a profit of Rs. 90 Mn during corresponding period of 2010.
Revenue during the period declined by 10%, as a result of the drop in volume during the first quarter and then the sharp drop in the price of Tea at the Colombo auctions. The traditional Nuwara Eliya flavoury season failed due to unfavorable weather conditions. The prices of Nuwara Eliya Tea declined by over Rs.40/-compared to the same period of previous year. This had a significant impact on the results during the period under review.
The wage increase of 27% that was effective from the 1stof April 2011, did impact on the results during the second quarter and is expected to cost the company an additional Rs. 250 Mn, which includes the increase in the provision for terminal benefits..

http://www.cse.lk/cmt/upload_report_file/727_1313056303620.pdf

But a plantations lover in this forum continuously praised these plantation sector counters few months ago. It was not just one off but many many times. He gave a hell of lot examples & told many fairytales to us. If I can recall some of these are Low P/E, Low PBV, wage hike is negligible, timber sales, high tea/rubber prices etc. Simply he wanted us to think why we do not buy plantation sector shares.
No matter what I must say he’s a quite knowledgeable person but horribly went wrong with plantation sector calculations.
This plantation lover in this forum likes to say “ X “ results is out as I predicted but hes extremely quiet about these plantation sector companies results.


Overall......well said Naresh Ratwatta.

lol @ plantation lover.

I do not mean to target any individual. But the below quotes are a few I keep in mind. Maybe we can learn something from them.


1)
"True merit, like a river, the deeper it is, the less noise it makes" ~Edward Frederick Halifax

2)
"Wear your learning like your watch, in a private pocket; and do not pull it out, and strike it, merely to show that you have one."
~Lord Chesterfield

3)
"Any party which takes credit for the rain must not be surprised if its opponents blame it for the drought."
~Dwight Morrow

4)
"Nobody stands taller than those willing to stand corrected."
~William Safire

I think one quarter results (when it includes a huge adjustment in gratuity expense) should not be looked at as it will spoil the whole plantation sector.
Anyone who can add 2+2 could have anticipated this effect because of this salary adjustment. How will the weather disrupt production? and the world market price for the main produce. If it holds steady then end of the year results should be good. This my opinion. I may be wrong!!!!