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Spectacular profit and turnover growth at Dipped Products
-17-05-2005-
Revenue tops
Rs 6.1 billion; pre-tax profit up 57% to Rs 671 million from growth in
all business sectors
Spectacular
growth in the hand protection segment and a substantial increase in
profitability of its plantation company have enabled the Dipped Products
Group (DPL) to post exceptional results in the year ended March 31,
2005.
In results released to the Colombo Stock Exchange this week, the Group
has reported a record pre-tax profit of Rs 671 million, up 57 per cent
over the previous year, on a turnover of Rs 6,139 million, which
represents a growth of 24.5 per cent.
Sales of non-medical rubber gloves, the principal source of Group
income, rose to Rs 4,640 million, an increase of 29.5 per cent, while
revenue from the Group’s plantation sector companies grew 12 per cent to
Rs 1,740 million.
The Group’s pre-tax profits were boosted by generous contributions from
the hand protection sector which reported earnings before tax of Rs 397
million (a growth of 37 per cent) and the plantation sector which
recorded a 62 per cent increase in profitability to generate Rs 224
million.
The Group’s Italian marketing subsidiary ICO Guanti SpA contributed Rs
116 million on a turnover of Rs 2,002 million, with its pre-tax profits
growing by an outstanding 79 per cent over 2003-04.
Profit attributable to the company grew a remarkable 66 per cent to Rs
487 million, results which Hayleys Group Chairman Rajān Yatawara has
described as “exceptional.” Noting that the profits recorded were “a
culmination of a consistent performance maintained throughout the year,”
Mr. Yatawara has stated that “shareholders will agree that the policies
and strategies adopted by the Group have delivered exceptional results.”
He also points out that the company’s ability to generate value into the
future has been enhanced by the fact that greater participation in the
ownership (of the company) has devolved to persons and institutions that
have a strong interest and ability to affect the future course of the
Group.
The Directors of Dipped Products have proposed a final dividend of 20
per cent which represents a total dividend of 40 per cent for the year
which will be tax free in the hands of shareholders. Taking into
consideration a scrip issue of one bonus share for every five ordinary
shares in August 2004 and a further bonus issue of one for one in
February 2005, the dividend pay out is 140 per cent greater than the
previous year.
DPL has also disclosed that the strong performance of all manufacturing
locations enabled Grossart Ltd, Neoprex Ltd, and Venigros Ltd to declare
interim dividends of 200 per cent, 150 per cent and 100 per cent
respectively. The Group’s plantation company Kelani Valley Plantations
Limited declared a first and final dividend of 25 per cent. KVPL’s
managing company DPL Plantations in turn declared a 50 per cent dividend
which is recognised in the current year.
The dividends exempt from tax received from manufacturing subsidiaries
were redistributed as a 20 per cent interim dividend to shareholders in
March 2005.
Reviewing the highlights of the year, Dipped Products Managing Director
N. G. Wickremeratne has reported that increases in output and profit
came from all main manufacturing locations which approached near optimum
capacity utilisation.
Sales volumes of the range of Industrial products which includes the
Heavy Duty Industrial gloves and the Interface range of Nitrile gloves
increased during the year making significant contribution to profit.
Strong demand for these products came from traditional markets in the US
and the EC and also from emerging markets in South America. Sales of the
fabric supported glove range of Grossart which has been augmented by the
production from Texnil grew 54 per cent in volume terms.
Following the thrust given to marketing of consumer gloves market shares
increased in Europe. In the UK DPL products were introduced to Woolworth
and Morrisons - Safeway. In Holland the company’s products were listed
at Albert Heijn whilst in Italy sales to COOP ITALIA were well received.
These are additions to the reputed list of supermarkets worldwide that
are served by the Group.
In the plantation sector, the rise in world tea prices coupled with
stronger demand for Ceylon tea largely contributed to the growth in
turnover and profit, while profits from rubber were satisfactory as
well, Mr. Wickremeratne notes. The profit share from Mabroc Teas, an
associate in which KVPL has a 40 per cent share and which is engaged in
export of value added tea, has been incorporated in its entirety for the
first time and made a significant contribution to profits.
Looking to the future, he disclosed that “The mix of products (in the
hand protection sector) has shifted to the high priced segment. However
capacity constraints were encountered in the more standard offer in the
range. The intrinsic appeal of DPL to its customers is that it can
provide a complete range of products, which they may purchase
competitively. Hence work commenced on the fabrication and installation
of a new line at Venigros which is expected to add a further 20 per cent
to volumes in June 2005.”
Construction was completed on the facility of Dipped Products (Thailand)
Ltd in Hat Yai to produce medical gloves and trial production commenced
in January. The project was completed at a cost slightly in excess of US
$ 9 million. The quality of gloves from the first three of six lines
presently in operation has been to expectation. The balance three lines
though installed will become operational by the end of May 2005.
Customer evaluation of our products has been favorable and trial orders
have been placed.
The US is the single largest consumer of medical gloves and as a
pre-requisite to access this market DPL has obtained the 510 K
Pre-Market Notification from the FDA. In the EC certification to
Category III has been completed. Marketing arrangements are in place in
the US and EC. “Whilst we are confident of the success of this project
we need to caution against an expectation of immediate profitability as
time will be required to build up the customer base for the large
output,” Mr. Wickremeratne said.
DPL has developed into a large international provider of hand protection
wear to the consumer and industrial market sectors also referred to as
the non-medical sector. The medical sector, estimated at US $ 3 billion,
is expected to be both competitive and rewarding. “We are investing in
the project in Thailand the care given to quality and precision to
create the platform to make the more value added products including
surgeon’s gloves in the future,” he said. “In all sectors we invest in
marketing DPL and its products and service and endeavor to deliver on
the promise of ‘handling you with care’.”
“Each act of wearing a glove is an implicit expression of trust that the
protection sought will be afforded. This is as true when the danger is
more feared than real, as when the hazard is known,” Mr. Wickremeratne
explained, adding that: “DPL derives its proposition of Handling you
with care from this instinctive trust that our customers place on us. It
is a trust that has been earned by delivering on expectations which
often defy careful delineation and definition.”
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