|
Dipped products
show robust growth in 2005/06, but profits dip
The Dipped products Group (DPL) has reported robust growth in
sales volumes and revenue in 2005-06, against what the company
calls 'a tide of adverse factor.'
In results released to the Colombo Stock Exchange this week, DPL
and its subsidiaries comprising world class hand protection
manufacturing companies and plantations reported a turnover of
7,109 million, up 16 per cent over 2004-05, with revenues from
the Hand Protection sector growing 18 per cent and 10 per cent
in the Plantation sector.
In the reporting period, DPL's hand protection business in
particular weathered a 10-year high in rubber prices which
resulted in inflated production costs. All sectors of the
business were affected by higher energy costs, wage increases
and margin erosion due to an unrealistic exchange rate. The
Plantations were adversely impacted by sluggish tea prices and
higher taxation.
Additionally, start-up losses at DPL's maiden venture in
Thailand for the manufacture of medical gloves affected the
Group's bottomline.
Consequently, profit before tax at Rs. 415 million represented a
decrease of 33 per cent over the previous year's Rs. 621
million, after discounting the extraordinary profits earned in
that year from the sale of shares. Profit attributable to the
company declined 41 per cent to Rs. 286 million.
Nearly half the declining profits are attributed to the loss of
Rs. 103 million incurred by Dipped Products Thailand Limited (DPTL)
in its first year of manufacture of medical gloves. These losses
were on account of unexpected commissioning problems of
ancillary equipment, interruptions to power supply and
unprecedented floods in Southern Thailand in November and
December. These issues have now been resolved, the company said.
In contrast, DPL's
non-medical rubber glove manufacturing operations in Sri Lanka
and its marketing subsidiary in Italy turned in a strong
performance to post revenue of Rs. 5,497 million, underscoring
the capability of the Group to deliver robust growth even
against a tide of adverse factors. The manufacture and sale of
non-medical gloves in Sri Lanka increased 17 per cent to Rs.
3,383 million, while ICO guanti SPA of Italy increased sales to
Rs. 2,068 million.
Meanwhile DPL
Plantations, which manages Kelani Valley Plantations Ltd., (KVPL)
and its subsidiaries reported turnover growth of 10 per cent to
Rs. 1,918 million. Rubber production grew by 11 per cent in the
year under review reversing a decline witnessed since 2002, and
combined with a 50 per cent rise in prices during the year,
contributed significantly to profit, offsetting to some degree
the decline in the performance of tea. Tea production rose by 6
per cent, but crop would have been greater if to for the
inclement weather conditions that prevailed, the company said.
Hayleys Group and DPL chairman Rajan Yatawara said: It is
perhaps in adverse circumstances that the true metal of
individuals and organizations can be judged. The performance of
non-medical gloves in the Hand protection sector must be
considered good. Admittedly the losses incurred in Thailand were
more than expected but here too we have cause to be pleased that
we have found customers and markets for the large volumes we are
beginning to produce."
"Importantly we are
now able to build and manage large production facilities
off-shore and that is an investment in capacity development for
the future.
DPL Managing
Director N. G. Wickremeratne added: "Manufacture of non-medical
gloves in Sri Lanka had to contend with the sharp rises in
rubber prices and other input costs. As important was the effect
of a rupee which did not adjust to accommodate the near double
digit inflation throughout the year. This sector therefore did
well to register a profit of Rs. 267 million." |
|