Dipped Products Group posts strong 1H growth

An improved performance by its plantations company and higher volumes from local manufacturing have enabled Dipped Products PLC (DPL) to mitigate reduced margins in its core business and post healthy profit and turnover growth at the end of the second quarter of 2010-11.

Although prices for latex depressed margins on the company's rubber glove manufacturing operations in Sri Lanka and Thailand rose by nearly 50 percent, the Hayleys Group's globally-significant hand protection business has reported post tax profit of Rs Hilmy Careem 218 million for the six months ending September 30, a growth of 134 percent over the first half of the previous year.

Turnover increased by 34 percent to Rs 7,073 million, with revenue from hand protection improving by more than 30 percent to Rs.5,529 million and from plantations by 60 percent to Rs 1,860 million before adjusting for inter-segmental sales. Profit before tax grew 66 percent to Rs 275 million, an increase of Rs 109 million over the corresponding six months of 2009-10. Profit attributable to equity holders of the company improved by 36 percent to Rs 152.4 million.

Dipped Products Thailand (DPTL) DPL's medical glove manufacturing company, increased its turnover by 30 percent to Rs 957 million in the review period, while ICOGUANTI S.P.A. the Group's Italian marketing company posted revenue of Rs 1,768 million, a 15 percent improvement.

Speaking on DPL's six month performance, Managing Director J. A. G. Anandarajah said local manufacturing recorded a 38 percent increase in FOB turnover on a volume increase of 10 percent. However, the average price for RSS I in the review period was Rs 401.37, nearly double the average price of Rs 207.36 in the same period of last year.

"In this context, the results for the half year reflect the impact of internal initiatives to improve operational efficiencies and the continuous efforts to reduce cost," he said. "These increases could not prevent a substantial erosion of margins on our manufacturing operations both in Sri Lanka and Thailand."

Conversely, the high rubber prices boosted turnover and profit of Kelani Valley Plantations PLC (KVPL), the DPL Group's plantation subsidiary, whose contribution to DPL's operating profit improved to Rs 197 million from a loss of Rs 183 million in the first half of last year. KVPL's turnover from rubber in the reviewed six months improved 84 percent to Rs 522 million while revenue from tea increased by 57 percent to Rs 1,358 million.

Established in 1976, Dipped Products is one of the leading non-medical rubber glove manufacturers in the world, and accounts for a five percent share of the global market.

The company's products now reach 68 countries.