Financial Times

Dipped Products group's net profit up 81% in first nine months
The Dipped Products Group (DPL) has reported a very healthy profit growth for the nine months ending December 31, 2004, with excellent contributions from its manufacturing, international marketing and distribution and plantation sector operations, the company said.

Figures released this week show that consolidated profit before tax rose by 64 per cent to Rs 472.6 million over the corresponding period of last year on a turnover of Rs 4.4 billion, which was up 22 per cent. Net profit for the period under review grew by a remarkable 81 per cent to Rs 339 million. This follows a 71 per cent growth achieved in the first six months of the year.

According to DPL Managing Director N. G. Wickremeratne, improved prices for rubber gloves coupled with stronger demand from international markets and the solid performance of KVPL were the main contributory factors to profit growth. He said capacity utilization at the group's manufacturing plants had been near 100 per cent due to demand in the period under review. Earnings were also helped by exchange gains up to December 31, due particularly to the strong performance of the Euro.

The outlook for the group has been boosted further by the commissioning in January of the first production line at its medical glove manufacturing facility in Thailand, which represents DPL's venture into this high volume though competitive sector. The Thai factory is expected to become fully operational by end March.

Another significant development is the consolidation of the Hayleys Group's holding in DPL consequent to the decision by Richard Peiris and Company Ltd., to sell its stake of nearly 30 per cent in the company. Approximately a third each of this tranche of shares has been acquired by the Hayleys Group, foreign collaborators who already had a stake in DPL, and DMH Capital which represents 115 of the company's management staff and Aureos Capital.

As a result, there is now a greater convergence of the interests of major stakeholders in future improvements of DPL, Mr. Wickremeratne said. The DMH stake is a long term investment by the company's managers, who are not expected to have access to the shares for a seven year period, and returns would depend on the company's performance over this period.

He also reported that two foreign shareholders of Venigros, one of DPL's high-end industrial glove manufacturing companies in Sri Lanka, had divested their holdings and increased their stakes in DPL. to more than 6 per cent each. Their shares in Venigros were acquired by DPL, making it a fully owned subsidiary of the group.

DPL also said Nissanka Weerasekera of Aureos Capital has been invited to join the Board as a representative of DMH Capital. Shareholders' approval is being sought at an EGM on 18th February 2005 for the Board appointment of Henry Peiris, a founding Director of the Company and a significant shareholder in his own right. Mr. Peiris, formerly Chairman of Richard Peiris & Co. Ltd. resigned from the DPL Board in early December 2004, when

Richard Peiris & Co. was disposing of its shareholdings in DPL. The Board of Directors of Dipped Products Limited comprises Messrs R. Yatawara (Chairman), N. G. Wickremeratne (Managing Director), R. W. Soysa, J. A. G. Anandarajah, Dr. W. S. E. Fernando, G. K. Seneviratne, A. D. B. Talwatte, and N. Y. Fernando.

Back to Business