Dipped Products posts best ever performance on record in ’06-07

-- Attributable profit up 94%, pre-tax profit grows 87%; turnover up by Rs 2.3 billion to Rs 9.413 billion --

Dipped Products (DPL), the Hayleys Group’s globally significant rubber glove manufacturing company has posted its best ever annual performance in the year ended March 31, 2007, reporting strong pre and post tax profit growth from its hand protection businesses and its plantation company.

Results released to the Colombo Stock Exchange this week reveal that profit attributable to equity holders grew a spectacular 94 per cent to Rs 557 million on a consolidated DPL Group profit before tax of Rs 775 million, which was up 87 per cent over the previous year. Group turnover grew by a hefty Rs 2,304 million or 32 per cent in the year under review to Rs 9,413 million.

The performance of the Group is particularly noteworthy in the context of the rapid fluctuations in costs it had to contend with during the year, and underscores DPL’s inherent capability to perform under demanding circumstances.

In DPL’s segmental results, turnover from Hand Protection increased remarkably by nearly 38 per cent to Rs. 7,566 million, with turnover from manufacturing operations up 53 per cent to Rs. 5,410 million. Nearly three-fourths of the growth was attributable to an increase in sales revenue of 43 per cent in Sri Lanka. DPL’s Hand Protection operations in Sri Lanka turned in a buoyant performance despite the continued turbulence in rubber prices and increases in other input costs. The profit of Rs 460 million attributable to this segment is an improvement of 79 per cent over the Rs 257 million registered in 2005-06.

Turnover in this segment was also boosted due to more than a doubling of turnover from medical glove sales in Thailand. It was further boosted by higher prices earned from a greater proportion of premium products. However, despite the sharp increase in turnover at DPTL, the company incurred a loss of Rs 169 million due to several factors, the company disclosed.

DPTL performed below full potential utilising 62 per cent of installed capacity in the year under review due to continuing problems associated with ancillary equipment that prevented optimum plant utlisation, rising rubber and energy costs. The company’s equipment related issues have already been largely addressed and attention is presently concentrated on improving plant utilization and to push up output efficiencies, a spokesman for DPL said. Concurrently several measures are being taken to save cost without sacrificing product quality.

Meanwhile, the Group’s plantation company Kelani Valley Plantations Ltd., (KVPL) registered significantly better profit on the back of strong rubber prices. KVPL Group revenue grew by 21 per cent to Rs 2,330 million in 2006 with tea and rubber recording increases of 11 per cent and 44 per cent respectively. Pre-tax profit rose to Rs 291 million, registering an increase of 92 per cent over the previous year.

This performance is largely attributable to robust rubber prices during the period under review. However crop intake in both tea and rubber and consequently profits dipped considerably during November and December when trade unions organised work slowdowns and strikes at estates over wage negotiations. The performance of this sector would have been considerably higher if not for the trade unions action that spanned a 30 day period close to the end of KVPL’s financial year.

Among the highlights of the year for DPL was the acquisition of a 70 per cent stake in Hanwella Rubber Products Ltd., (HRPL). One of the production lines was modified to augment the DPL range of “food safe” gloves, the demand for which has been growing in recent years. HRPL operations were progressively integrated during the year within the manufacturing and management systems of DPL. By the end of the period under review, in just ten months from acquisition, the company had recovered more than 50 per cent of its accumulated losses. It would not be unrealistic to expect the turn around to be completed in the current year, the spokesman said, disclosing that the takeover of HRPL is the first occasion DPL added capacity by acquiring an on-going operation – a process which necessitated learning of new skills and methodologies.

Established in 1976, Dipped Products is one of the leading non-medical rubber glove manufacturers in the world, and accounts for a 5 per cent share of the global market. DPL entered five new markets during the year, and the company’s products now reach sixty-three countries. Whilst Europe and North America remained major markets, exports to Asia, Africa and South America showed sizeable growth.

Products in DPL’s own brands Palmrite, DPL Occupational and Palm-Pro are presently available in thirteen countries.

The Board of Directors of Dipped Products PLC comprises Messrs N. G. Wickremeratne (Chairman), J. A. G. Anandarajah (Managing Director), H. A. Pieris, R. W. Soysa, , Dr. W. S. E. Fernando, G. K. Seneviratne, N. Y. Fernando, N. B. Weerasekera, R. K. Witanachchi, A. M. Pandithage (Alternate: R. A. Ebell) and R. Seevaratnam.