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Dipped
Products ends ’07-08 as $ 100 million business
Hayleys
Group’s world class hand protection company weathers
tough year with mixed results
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.”
“Steps taken to improve productivity and to contain working
capital, energy usage and waste should make the businesses
adequately resilient to withstand the challenges that lie
ahead.”
Anandarajah elaborated that for Dipped Products Thailand,
working near capacity, minimizing energy cost and reaching
optimum manufacturing efficiencies are crucial to turn the
corner. “Steps taken so far should show results in the
short term,” he said, explaining that DPTL is now operating
at improved capacity utilisation based on a healthier order
book. 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.
Anandarajah said the Group will seek to enter new markets,
in particular the emerging economies and broaden its product
offering in established territories. “We see opportunities
in Eastern Europe whilst further augmenting our positions
in Asia and South America. DPL has already established alliances
in Eastern Europe and volume intake from this region is steadily
growing. The Middle East is another area that will be pursued
with greater vigour,” he said.
The recent impetus given to R&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.
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. The company’s
products now reach 68 countries.
The Board of Directors of Dipped Products PLC comprises Messrs
N. G. Wickremeratne (Chairman), J. A. G. Anandarajah (Managing
Director), 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.
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