Dipped Products turnover past Rs. 11billion

The DPL Group comprising Dipped Products PLC, the Hayleys Group's globally ranked rubber glove manufacturer and its subsidiaries, has grown into a US $ 100 million business, reporting a consolidated turnover of Rs 11.153 billion for the year ending March 31, 2008.

Results released to the Colombo Stock Exchange this week reveal that the DPL Group's turnover growth of 18 per cent was achieved through healthy top line gains by its non-medical glove manufacturing operations in Sri Lanka, its medical glove plant in Thailand and plantation company Kelani Valley Plantations PLC (KVPL).

Revenue from Hand Protection grew 17 per cent to Rs 8,846 million while Plantations recorded a revenue growth of 21 per cent to Rs 2,828 million, the Company said. These figures included inter-segment sales.

Despite this growth, several factors including the general downturn in the global economic environment, the weak US Dollar, soaring oil prices, higher input costs and continuing high rubber prices affected the performance of the Hand Protection segment.

The Group's profit before tax declined by 14 per cent to Rs 616 million after discounting Rs 59 million accounted in the previous year from a surplus on the acquisition and sale of land. Profit after tax at Rs 515 million reflected a drop of nearly 23 per cent, while profit attributable to equity holders of the Company was Rs 371 million.

The medical glove manufacturing operations of Dipped Products Thailand Ltd., (DPTL) too were severely affected by the adverse conditions that prevailed. Although the company's turnover grew by a respectable 25 per cent to Rs 1,068 million, DPTL registered a loss of Rs. 271 million.

Profit from glove manufacturing operations in Sri Lanka was also limited to Rs 264 million, 43 per cent below that of the previous year, due to unfavourable conditions.

"The weakening of the US Dollar since September 2007, together with higher cost of latex, energy, freight and wages affected the Sri Lankan operations by over Rs. 600 million, after discounting the volume increases achieved during the year" DPL Managing Director J.A.G. Anandarajah disclosed. Among the positives, ICO Guanti SpA, DPL's Italy-based marketing company reported improvements in both turnover and profit, mainly due to the strong Euro, Anandarajah said.

The plantation segment also generated a record profit of Rs 442 million, a growth of 50 per cent over the previous year on the back of favourable market conditions for both tea and rubber, despite two wage increases within a span of 12 months and an escalation in input costs.

Assessing prospects for the future, Hayleys Chairman N. G. Wickremeratne said: "The outlook for the world's economy in the current year is far from encouraging. To cope with these challenges, the Group has already set in motion several initiatives to mitigate cost increases and to enhance its value creation."

Anandarajah elaborated that for Dipped Products Thailand, working near capacity, minimising energy cost and reaching optimum manufacturing efficiencies are crucial to turn the corner.

The company's performance could have been significantly better if not for the repeated disruptions caused by the thermal heaters critical to this facility. The problems with the heaters in respect of both reliability and efficiency have been addressed and additional customers secured for DPTL along with the expansion of product portfolio.

These measures combined with tighter systems to manage input and process costs should positively influence the performance of the company, he said.

The recent impetus given to R and D with the establishment of a new laboratory will open more avenues for deeper penetration of traditional markets and cement the relationships with existing customers. DPL is well geared to take on development of specialty products either in collaboration with customers or on its own, he added.

As reported last year, plant and equipment necessary for the manufacture of electrician gloves are in place. Development of a range of gloves that will offer guaranteed protection in high voltage applications has progressed to the final stages. "We are confident this range will significantly contribute to the Group's performance in the ensuing year," Anandarajah disclosed.