Dipped Products boost earnings as production normalizes

New factory in Biyagama EPZ increases capacity

Dipped Products Plc., one of the world’s largest manufacturers of non-medical latex gloves, has overcome the problems resulting from the closure of its Rathupaswala factory with a new facility opened at the Biyagama Export Promotion Zone (EPZ) and increased turnover in its hand protection segment 12% to Rs. 15 bn. in the year ended March 31, 2015, the company has said in its annual report.

DPL Premier Gloves Ltd. (DPGL), in the Biyagama EPZ is now on stream and the DPL group has posted an after tax profit of Rs. 1.39 bn., up 21% from Rs. 1.16 bn., earned a year earlier. The profit attributable to equity holders of the parent at Rs. 1.11 bn., is up 40% from the Rs. 795.1 mn. earned the previous year.

The company’s chairman, Mr. A M Pandithage, and its Managing Director, Dr. K I M Ranasoma, have told shareholders in the recently released report that commissioning their Biyagama facility under the banner of DPGL has been completed sooner than envisaged with high output plants for production of natural rubber low to medium thickness gloves installed and commissioned along with the supporting infrastructure.

DPL saw earnings from its plantations sector down to Rs. 390 mn., from Rs. 747 mln., the previous year due to the depressed rubber market, adverse weather conditions and the volatility of global tea prices. The plantation portfolio is held by two listed companies, Kelani Valley Plantations and Talawakelle Plantations owning tea and rubber estates.

Analysts said that while depressed rubber prices hurt the group’s plantation segment, it assisted hand protection.

Pandithage and Ranasoma said that the plantation sector had contributed Rs. 13.4 bn., to group turnover during the period under review, up 28% from a year earlier. This was partially due to Kelani Valley Plantations and Talawakelle Tea Estates consolidating 15 months of their results in view of changing their financial year from January – December to April-March.

"With enhanced production capacity (at Biyagama) the company had returned to normalcy of operations," they said. "Thus DPL was able to reduce order lead times and restore customer confidence that was challenged a year ago. It is pertinent to know that the DPGL was able to record a significant performance in its first financial year of operations."

DPL’s facility in Thailand manufacturing latex medical examination gloves had also turned around during the year contributing to the bottom line. This was partly attributable to the Ebola epidemic in West Africa creating a temporary surge in demand for medical disposable gloves.

Pandithage and Ranasoma said that with the new capacity installed at DPGL will be able to accelerate DPL’s unsupported glove business focusing specially on the retail and light industrial sectors in the new financial year.

They have also established a new company, DPL Universal Gloves Ltd., (DUGL) to consolidate the supported glove range for the industrial sector. This will see in installation and commissioning of new plants with knitting capabilities acquired in the last financial year.

DUGL, also set up in the Biyagama EPZ, will add new capacity for long length natural and synthetic latex industrial gloves in order to meet growing customer demand, they said. The development of a biodegradable nitrile glove, for which there is increasing demand for medical use, has been nearly completed.

The directors have recommended the payment of a final dividend of Rs. 4 per share on top of an interim dividend of Rs. 3 per share declared and paid last April.

Hayleys with 42.12% is the major shareholder of DPL followed by the EPF, with 13.06%. Hayleys subsidiaries, Volanka with 8.14%, Haycarb with 6.8% and Ravi Industries 0.95% gives Hayleys control of DPL.

The DPL share traded at a high of Rs. 151 and a low of Rs. 87 during the year under review against a trading range, of Rs. 134-Rs. 86 the previous year.

The Directors of the Company are Messrs. A M Pandithage (Chairman), Dr. K I M Ranasoma (MD), R K Witanachchi (Deputy MD), F Mohideen, K A L S Fernando (Technical Director), S C Ganegoda, Dhammika Perera, M Bottino (representing Icoguanti, DPL’s Italian partner) S Rajapakse, N A R R S Nanayakkara (Finance) and S P Peiris.

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