Dipped Products 1Q revenue Rs 2.9 b

Dipped Products PLC (DPL) has reported equitable revenue and profit growth at Group level in the first quarter of 2008-09 in the face of tough local and global business conditions that adversely impacted its manufacturing operations.

Results released to the Colombo Stock Exchange this week reveal that the Hayleys Group’s rubber glove manufacturing company which also has a significant interest in plantations, achieved a turnover of Rs 2.9 b for the three months ending June 30 an increase of 15 per cent over the first quarter of the previous year.

Turnover from Hand protection grew 11 per cent to Rs 2,265 m while Plantations grew 41 per cent to Rs 852m in the quarter under review before adjusting for inter-segmental sales.

Group profit before tax, at Rs. 183m reflected a growth of 11 per cent. Post tax profit grew by nearly 13 per cent to Rs. 153m.

Commenting on these results, DPL Managing Director J. A. G. Anandarajah said: “Although growth at Group level would seem satisfactory in the context of present conditions, the profit achieved does not reflect the Group’s potential, largely due to the impact of inflationary pressures on the margins of our manufacturing operations.”

He said profits from local manufacturing operations of the Group had declined 76 per cent over the corresponding quarter as a result of soaring latex prices, escalating energy and other input costs, rising domestic inflation and the static Rupee.

“DPL’s overall performance was the result of the strong performance of our plantations company and an improved contribution to turnover and profit from our Italian marketing company ICOGUANTI SpA,” Anandarajah said, disclosing that DPL Thailand, the Group’s medical glove manufacturing business had also increased production by 6 per cent in the quarter, improved income by 22 per cent and reduced its net loss of Rs 43 million in the corresponding quarter to Rs 32 million.

The substantial contributions to Group turnover and profit from Kelani Valley Plantations PLC (KVPL) were predominantly the result of turnover from tea and rubber growing 58 per cent and 19 per cent respectively, he said.

Anandarajah said the Group had persuaded international buyers to accept price increases that should positively impact on results in the second quarter of the year.

“The market accepts price increases necessitated by global factors like the weaker dollar and higher rubber and fuel prices,” he said. “Our concern is that cost increases arising from local inflation could continue to impede margins he also said.