Dipped Products Group’s 1H results show resilience despite factory closure setback

Wednesday, 30 October 2013 00:05 - - {{hitsCtrl.values.hits}}

The Dipped Products Group’s Hand Protection Sector posted a decline in revenue due to the closure of its production operations at Nedungamuwa, Rathupaswala arising from protests by villagers.

These protests were based on the misconception that the low pH in the wells of the area was caused by the treated effluent from the glove factory. The DPL management was required to voluntarily suspend the production operations in order to appease the villagers while the Government authorities commissioned several institutions to investigate the cause for low pH in the groundwater in the area. It has thus far not had any indication that the treated factory effluent is responsible for the low pH in the water sources in the area. Despite this fact, the factory operations continue to remain suspended. Group turnover affected Group turnover was affected by a 6% reduction in Hand Protection turnover – down to Rs. 6,903 m from Rs. 7,305 m in 1H of 2012/13. Plantations served to buoy Group turnover as turnover of this sector grew by 15% to Rs. 5,413 m from Rs. 4,694 m in the corresponding period of the previous financial year. Overall, the Dipped Products PLC Group, recorded a marginal increase in turnover amounting to 3% for 1H of 2013/14, despite a promising 13%

growth performance in 1Q 2013/14. Group Profit before Taxation (PBT) stood at Rs. 837 m for the period under review, a contraction of 13% compared to the corresponding period of the previous year (Rs. 967 m). Contribution to PBT from the Hand Protection Sector – the mainstay contributor to the DPL Group profitability under normal operating circumstances – contracted to Rs. 521 m from Rs. 656 m in the corresponding period in the previous year. Contribution to PBT from Plantations rose marginally to Rs. 316 m from Rs. 311 m in 1H 2012/13. Decelerating growth momentum Elaborating on these results, Dipped Products Managing Director Dr. Mahesha Ranasoma noted that the closure of Weliveriya production facility strained Hand Protection capacity, prompting an overall reduction in the Group’s profitability. As a result, Ranasoma noted that the Group PAT declined by 16% to Rs. 639 m from Rs. 764 m recorded in 1H 2012/13. He also noted that despite the redistribution of capacities to alternative production facilities and despite the support of long-standing customers, the current operating circumstances of the Hand Protection Sector has served to decelerate the growth momentum of the Group. Established in 1976, Dipped Products is one of the leading non-medical rubber glove manufacturers in the world, and accounts for a 5% share of the global market. The company’s products now reach 68 countries. The Board of Directors of Dipped Products PLC comprises A.M. Pandithage (Chairman), Dr. M. Ranasoma (Managing Director), N.Y. Fernando, F. Mohideen, K.A.L.S. Fernando, L.G.S. Gunawardena, S.C. Ganegoda, K.D.D. Perera, M. Bottino, R.M.T. Premarathna, V.R. Gunasekara and S. Rajapakse.