Dipped Products' third quarter results:

Glove segment improves while plantation loses

Continuing strong performances by businesses in the Hand Protection segment in the third quarter enabled Dipped Products PLC (DPL), the Hayleys Group's globally positioned rubber gloves business, to improve overall results for the nine months ending 31st December and lessen the impact of losses from its Plantation segment.

In result released to the Colombo Stock Exchange this week, DPL, comprising manufacturing operations in Sri Lanka and Thailand, a marketing company in Italy and a plantation company, reported turnover of Rs. 8.3 billion and pre-tax profit of Rs. 398 million, despite the plantation company showing a loss of Rs. 215 million for the period reviewed.

The Hand Protection segment more than doubled its operating profit from Rs. 297.9 million in the first nine months of last year to Rs. 646.2 million at the end of the third quarter of the current year, although turnover from the sector declined due to lower prices.

A noteworthy contribution to performance came from Dipped Products (Thailand) Limited (DPTL) the Group's medical glove manufacturing business, which posted a pre-tax profit of Rs. 82 million and increased turnover by 20 per cent to Rs. 1.1 billion. Commenting on these results, DPL Managing Director J. A. G. Anandarajah said: "The Group has performed better than expected at the beginning of the year by recouping volumes, substantially reducing borrowings and maintaining margins. Consequently, overall results are much better than they were at the end of the second quarter."

He said the performance of DPTL was particularly encouraging as the company has ended its financial year on 31 December 2009 with a pre-tax profit of approximately Rs. 100 million, which would be consolidated with the group's year and figures.

He disclosed that a project to expand production capacity by 50 per cent in Thailand is scheduled to commence shortly.

In the Plantation sector, Kelani Valley Plantations PLC performed better in its final quarter of the year.

Improved commodity prices helped to reduce the losses incurred earlier in the year as a result of a 42 per cent increase in wages and crop losses due to bad weather, Anandarajah said.

The Group reduced its net finance costs by 63 per cent to Rs. 71.7 million by local manufacturing operations trimming borrowings by round Rs. 500 million and benefitting from lower interest rates. The Group's profit before tax of Rs. 398 million for the nine months reflected a decline of only 1 per cent compared to the same period in the previous year, in sharp contrast to the 37 per cent decline seen at the end of the second quarter.

Group profit after tax at Rs. 282 million was lower by 7 per cent, as against a 51 per cent drop for the six months that ended on 30 September 2009.

Profit attributable to equity holders of the company grew by 50 per cent to Rs. 276 million over the corresponding nine months of last year with a basic earnings per share of Rs. 4.60 for the period.

In segmental result, Local Manufacturing contributed Rs. 3.5 billion to the Hand Protection segment's turnover of Rs. 6.7 billion, while turnover from the Plantation sector amounted to Rs. 1.9 billion.

Revenue from ICOGUANTI S.p.A., the DPL Group's Italian marketing company, was on par in Euro terms with that of the corresponding nine months of last year. The company recorded a profit before tax of Rs. 171 million during the period under review. Established in 1976, Dipped Products is one of the leading non-medical rubber glove manufacture in the world, and accounts for a 5 per cent share of the global market. The company's products now reach 68 countries