Dipped Products sustains performance in first half 2007-08

A strong showing by the Sri Lankan manufacturing operations of Dipped Products PLC (DPL) in the first half of 2007-08 has helped Sri Lanka’s global player in the hand protection business to sustain a performance comparable with the first half of the previous year.

The Hayleys Group company which also has a substantial interest in plantations has reported profit before tax of Rs 352.8 million for the six months ending September 30, 2007, on par with that of the corresponding six months (Rs 393.5 million) after discounting an extraordinary income of Rs 37 million accounted in that period as surplus from the acquisition of Hanwella Rubber Products Ltd., (HRPL).

Group turnover for the period reviewed grew 16 per cent to Rs 5.4 billion, bolstered by a 19 per cent growth in revenue and a 14 per cent increase in export volume from the local hand protection manufacturing operations. Profit from hand protection grew 10 per cent, a company statement said.

Commenting on these figures, DPL Managing Director J. A. G. Anandarajah said: “DPL’s ability to match the performance of the first half of the last financial year demonstrates the resilience of its local manufacturing businesses vis-à-vis its bottom line.”

DPL’s plantation company Kelani Valley Plantations PLC (KVPL) which increased turnover by 3 per cent to Rs 1,246 million in its corresponding half year performance ending June 30, 2007, recorded a pre-tax profit drop of 32 per cent (Rs 67 million) to Rs 143 million, while net profit declined by 26 per cent.

Carried forward crop losses (reported in the 1st quarter of the current year) incurred by KVPL as a result of industrial action on the estates in late 2006 combined with higher wage costs for that company were attributed for the decline in the profits of KVPL.

Anandarajah said fuel costs alone had increased by Rs 37 million over the corresponding period of last year boosting overall energy costs by 27 per cent, while freight charges appreciated by 24 per cent in the six months reviewed. These escalations in costs were after discounting for increases caused by volume growth. Exchange gains in this period somewhat mitigated the costs of finance in local manufacturing operations but overall Group finance costs rose by11 per cent, he said.

Meanwhile, DPL Thailand, the Group’s maiden medical gloves manufacturing venture, has reported a 15 per cent increase in sales volume and an 11 per cent increase in revenue in Thai Baht terms. The company reduced its losses by nearly 13 per cent in Baht terms in the review period, but a 10 per cent appreciation of the Baht against the US Dollar showed a higher loss in rupee terms.

These factors resulted in reduction of Group post tax profit from Rs 308 million after discounting for extraordinary income, to Rs 288 million, the statement said.