Mixed fortunes for Dipped Products in 1H

Hand Protection sector posts strong performance; Wage hike,
weather-related crop shortages generate loss for plantations subsidiary

Dipped Products PLC (DPL), the Hayleys Group’s globally-significant rubber glove business, has reported turnover of Rs. 5.3 billion and pre-tax profit of Rs 166 million for the six months ending September 30, 2009, a period characterized by a strong performance by its Hand Protection sector and losses from the Group’s Plantation business.
Filing its second quarter results with the Colombo Stock Exchange this week, DPL reported that operating profit from its businesses in Hand Protection grew more than two and a half times to Rs. 393 million in the period reviewed. In contrast, its plantation company’s contribution to operating profit declined to a loss of Rs. 183 million as opposed to a profit of Rs. 233 million in the first six months of last year.
The principal cause for the Plantation sector loss was the impact of the higher wage bill of Kelani Valley Plantations PLC (KVPL) which amounted to Rs. 211 million for the six months, on account of back wages and gratuity provision.
In the Manufacturing sector, Dipped Products (Thailand) Limited (DPTL) the Group’s medical glove manufacturing business, improved turnover by 19 percent to Rs. 731 million through a higher utilization of capacity, and achieved a profit before tax of Rs 70 million, the company said.
DPL Managing Director J. A. G. Anandarajah said: “Although the Group’s bottom line was affected by the substantial losses incurred by the Plantation sector as a result of the steep wage hike and weather-related crop losses, the strong showing of Hand Protection in both Sri Lanka and Thailand is encouraging.”
As a consequence of the losses of the Plantation sector, the DPL Group’s pre-tax profit declined 37 per cent, while post-tax profit reduced to Rs. 93 million, a drop of 51 per cent.
In segmental results, Hand Protection recorded a turnover of Rs 4.2 billion, with Local Manufacturing contributing Rs. 2.1 billion. Turnover from the Plantation sector amounted to Rs. 1.2 billion.
Revenue from ICOGUANTI S.p.A., the DPL Group’s Italian marketing company, was on par in Euro terms with the corresponding six months of last year. The company recorded a profit before tax of Rs. 102 million during the period under review.
Mr. Anandarajah said the Hand Protection businesses see customer orders improving in many markets, although the recovery in the high value segment remains sluggish. To partly off-set the shortfall in orders, several new accounts have been secured by DPL in both the industrial and retail sectors. Improvement in weather, crops and commodity prices should somewhat cushion the losses from Plantations in the quarter ahead, he added.
Established in 1976, Dipped Products is one of the leading non-medical rubber glove manufacturers in the world, and accounts for a 5 percent share of the global market. The company’s products now reach 68 countries.