Dipped Products PLC (DPL), the non-medical glove manufacturing unit of Hayleys group, reported a net profit of Rs.668 million or Rs.11.16 a share for its January –March quarter (4Q17) recording an increase of 145 percent from a year ago.
The bottom line was supported by better performance of DPL’s hand protection and plantation segments. DPL share ended Rs.3.00 higher at Rs.95 at yesterday’s market close.
The DPL group revenue rose by 11 percent year-on-year (YoY) to Rs.6.6 billion for the quarter with the gross profit increasing by a strong 31 percent YoY to Rs. 1.44 billion.
The bottom-line performance was also supported by better cost management by the group despite some challenges faced by the group’s hand protection and plantation segments.
The group’s hand protection business had been affected by higher latex taxes prevailed during the 4Q17 while plantation segment performance by lower crop, mainly arising from adverse weather conditions and restrictions imposed on using weedicides, the company said in a statement.
The distribution costs fell by 33 percent YoY to Rs.140.4 million and administration costs also fell by 5 percent YoY to Rs.596.6 million.
DPL had to raise the daily wages of its plantation workers from Rs.620 to Rs.730 effective from October 2016 in accordance with the collective agreement between the Employers’ Federation of Ceylon and plantation sector trade unions.
DPL’s hand protection segment was recovering from loss of orders from its overseas clients to regional competitors, as the company had to suspend production briefly amid water contamination charges of which it was cleared later. Meanwhile, for the year ended March 31, 2017, the DPL group made a net profit of Rs.753.2 million or Rs.12.58 a share recording an increase of 116 percent YoY. The bulk of the earnings were generated during the final quarter.
The total turnover reached Rs.24.3 billion, up 11 percent.
DPL’s non-medical rubber glove exports account for about 5 percent of the global market and the company’s products reach 68 countries.
According to the segmental analysis, hand protection business revenue rose from Rs.12.7 billion to Rs. 14.3 billion during the 12 months while operating profits reached Rs.925.6 million, up from Rs.641. 2 YoY.
In May 2016, DPL invested 3.245 million euros or Rs.535 million in its 60 percent Italian subsidiary ICOGUANTI S.p.A to acquire the balance 40 percent stake.
Meanwhile, the group’s plantation business increased its revenue from Rs.9.5 billion to Rs.10.2 billion while the segment’s operating profit rose to Rs.564.1 million from Rs.324.2 million YoY. As of March 31, 2017, Hayleys PLC held 42.12 percent stake in DPL while the state-controlled private sector pension fund, Employees’ Provident Fund held 12.76 percent stake being the second largest shareholder.