Dipped Products March profits flat amid margin squeeze

Dipped Products PLC (DPL), the non-medical glove manufacturing unit of the Hayleys group, saw its net profit edging up 4 percent in the March quarter (4Q16) to Rs.270.4 million from a year ago, helped by the other income and gains.

The earnings per share (EPS) improved to Rs.4.52 from Rs.4.34.
The top line of the group contracted with the revenue falling 8 percent year-on-year (YoY) to Rs.5.94 billion and the cost of sales rising 8 percent YoY to Rs.4.85 billion, resulting in a gross profit of Rs.1.09 billion, down 9 percent.

The other income and gains of Rs.147.2 million, probably stemming from a sale of assets however helped the group to boost its profits for the quarter. 
For the year ended March 31, 2016 (FY16), the group net profit fell 69 percent YoY to Rs.345.7 million with the revenue falling as much as 21 percent YoY to Rs.21.9 billion. 

The EPS deteriorated to Rs.5.78 from Rs.18.58. Dipped Products Managing Director Mahesh Ranasoma said the year had been very challenging for the company amid heightened completion from the regional players and slowdown in some of DPL’s key markets. 

A segmental analysis of the group showed its hand protection segment revenue falling 15 percent YoY to Rs.12.7 billion. The segment’s pre-tax profit also fell 63 percent YoY to Rs.549 million. The plantation segment’s revenue fell 29 percent YoY to Rs.9.5 billion and reported a pre-tax profit of Rs.154 million compared to Rs.390 million YoY. 

DPL was forced to relocate its factory to the Biyagama export processing zone at additional costs amid water contamination allegations.
The company also has operations in Indonesia and Thailand.