Dipped Products profit up Q3 end

Continuing strong performances by businesses in the Hand Protection segment in the third quarter enabled Dipped Products PLC (DPL), the Hayleys Group’s globally positioned rubber gloves business, to improve overall results for the nine months ending December 31 and lessen the impact of losses from its Plantations segment.

In results released to the Colombo Stock Exchange this week, DPL, comprising manufacturing operations in Sri Lanka and Thailand, a marketing company in Italy and a plantation company, reported turnover of Rs 8.3 billion and pre-tax profit of Rs 398 million, despite the plantation company showing a loss of Rs 215 million for the period reviewed.

The Hand Protection segment more than doubled its operating profit from Rs 297.9 million in the first nine months of last year to Rs 646.2 million at the end of the third quarter of the current year, although turnover from the sector declined due to lower prices.

A noteworthy contribution to performance came from Dipped Products (Thailand) Limited (DPTL) the Group’s medical glove manufacturing business, which posted a pre-tax profit of Rs 82 million and increased turnover by 20 percent to Rs 1.1 billion.

Commenting on these results, DPL Managing Director J. A. G. Anandarajah said: “The Group has performed better than expected at the beginning of the year by recouping volumes, substantially reducing borrowings and maintaining margins. Consequently, overall results are much better than they were at the end of the second quarter.” He said the performance of DPTL was particularly encouraging as the company has ended its financial year on December 31, 2009 with a pre-tax profit of around Rs 100 million, which would be consolidated with the Group’s year end figures.

He disclosed that a project to expand production capacity by 50 percent in Thailand is scheduled to commence shortly.

In the plantation sector, Kelani Valley Plantations PLC performed better in its final quarter of the year. Improved commodity prices helped to reduce the losses incurred earlier in the year as a result of a 42 percent increase in wages and crop losses due to bad weather, Anandarajah said.

The Group reduced its net finance costs by 63 per cent to Rs 71.7 million by local manufacturing operations trimming borrowings by around Rs 500 million and benefitting from lower interest rates. The Group’s profit before tax of Rs 398 million for the nine months reflect a decline of only 1 percent compared to the same period in the previous year, in sharp contrast to the 37 per cent decline seen at the end of the second quarter.

Group profit after tax at Rs 282 million was lower by 7 percent, as against a 51 per cent drop for the six months that ended on September 30, 2009.