Dipped Products turnover exceeds Rs. 2.5 billion in first quarter

DIPPED PRODUCTS PLC, the Hayleys Group’s rubber glove manufacturing company which has a significant interest in plantations, has reported a turnover of Rs 2,541 million for the first quarter of 2007-08, following healthy growth in production by its companies in the hand protection business.

In results released to the Colombo Stock Exchange, the Group reported that turnover had grown 17 per cent.

This was made possible by the hand protection segment, in which export volume from Sri Lanka increased by 18 per cent, enabling Dipped Products to achieve a turnover of Rs 2,036 million from its hand protection businesses, a healthy 20 per cent increase over the corresponding quarter.

Turnover from the first quarter of its plantation company Kelani Valley Plantations PLC, (KVPL) grew 3 per cent to Rs 604 million.

“This is a reasonable performance given the conditions under which it was achieved,” Dipped Products’ Managing Director J. A. G. Anandarajah commented, disclosing that Dipped Products Thailand, the Group’s medical glove manufacturing venture had also increased sales by 14 per cent in Thai Baht terms although the continuing appreciation of the Baht against the US Dollar had exerted a negative impact on results from that company.

The profits of the Group’s local operations had also been affected by several factors including increased fuel and freight costs and a higher tax provision and finance costs, he said.

The Group’s pre tax profit for the quarter under review at Rs 166 million was down Rs 26 million over the first quarter of last year, when compared with profit excluding the extraordinary income of Rs 34 million in the previous year arising from the surplus on acquisition of Hanwella Rubber Products Ltd.

Significant factors contributing to the profit erosion were an increase of over 50 per cent in freight costs in the quarter under review (consequent to a shortage in freight space from Colombo), a near two third increase in income tax, a twofold increase in finance costs and substantial crop losses and a higher wages bill for Kelani Valley Plantations.

One of the notable adverse factors for Kelani Valley Plantations was the loss of a third of its tea crop compared with the same period last year following the strikes on the estates late in 2006, which prevented the company from taking full advantage of its quality season.

Compounding this was a 47 per cent increase in the cost of fertiliser, higher energy costs, and higher wages to labour, all of which eroded margins.