Dipped Products hurt by weakened dollar, rising costs

A weakening US Dollar since September 2007, higher cost of latex, energy, freight and wages have affected the Dipped Products PLC (DPL) group, a globally ranked rubber gloves manufacturer. This is despite the unit, part of the conglomerate Hayleys Group reporting a consolidated turnover of Rs 11.153 billion for the year ending March 31, 2008, according to results released to the Colombo Stock Exchange this week.

The group’s turnover growth of 18 percent 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 percent to Rs 8,846 million while Plantations recorded a revenue growth of 21 percent to Rs 2,828 million, according to the statement.

However the Group’s pre-tax profits eased by 14 percent 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 percent. 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 25 percent to Rs 1,068 million, DPTL registered a loss of Rs. 271 million. Profit from glove manufacturing operations in Sri Lanka also fell to Rs 264 million, down 43 percent from the previous year, according to DPL Managing Director J. A. G. Anandarajah.

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. The plantation segment also generated a record profit of Rs 442 million 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.

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.