Dipped Products top line up on new glove markets, strong plantation results

Hayleys group company, Dipped Products PLC (DIPD) posted higher revenues as the non-medical glove maker ventured into new markets while the group’s plantation segment rebounded strongly. But the profit for the latest quarter came down due to higher direct and indirect costs.  Releasing its interim accounts for the quarter ended in March 31, 2018 (4Q18), DIPD reported consolidated revenue of Rs.7.1 billion, from Rs.6.6 billion revenue in the corresponding quarter a year earlier, which translates an 8 percent increase year-on-year (YoY).

But the gross profit came in at Rs.1.4 billion, down 2 percent YoY as the direct costs rose 11 percent YoY to Rs.5.7 billion. 

The group reported earnings of Rs.4.78 a share or Rs.286 million for the March quarter compared to Rs.11.16 a share or Rs.668 million profit during the same quarter last year. 

DIPD Managing Director Mahesha Ranasoma said the steep increase in latex prices—a key raw material used in glove manufacturing— has hurt profits. 
“During the financial year, the company also launched several innovative products into the market and secured several new customers across the global market”, said Ranasoma in a statement issued to the press after the interim results were released last week. 

DIPD share ended 0.12 percent or 10 cents up at Rs.86 at Friday’s market close. 

DIPD is one of the leading non-medical gloves manufacturers and suppliers in the world and supplies about five percent of the global market requirement. 

The company manufactures general and industrial gloves and has factories in both Sri Lanka and Thailand. DIPD also manage large-scale tea and rubber plantations.
For the financial year ended in March 31, 2018, DIPD reported Rs.28.5 billion in consolidated revenues, up 17 percent YoY but the cost of sales rose by 18 percent YoY to Rs.24 billion resulting in a gross profit of Rs.4.5 billion, up 12 percent YoY. 

The glove manufacturing segment or the hand protection business of the group contributed with Rs.15.9 billion worth revenues, up from Rs.14.3 billion in the previous year. 

However, the segmental operating profit nearly halved to Rs.507.5 million from Rs.925.6 million in the previous year. 

The segment performance has also supported by its Italian marketing subsidiary Icoguanti S.p.A, Ransoma stressed. 

As a part of group re-structuring, glove manufacturing subsidiaries Grossart (Private) Limited and Neoprex (Private) Limited were amalgamated in January 2018.
The 2017/18 financial performance was mainly supported by the group’s plantation business which recovered strongly from the previous year’s dip due to higher than average prices fetched by tea at the Colombo auction and also slightly better volumes. 

Plantation business revenue for the year was Rs. 12.7 billion, up from Rs.10.2 billion in the previous year. 

The segment’s operating profit was significantly up to Rs.1.2 billion from Rs.564.1 million in the previous financial year. 

Meanwhile for the year ended in March 31, 2018, DIPD reported earnings of Rs.8.28 a share or Rs.495.5 million compared to earnings of Rs.12.58 a share or Rs.753.2 million in the previous year. 

Hayleys group has 57 percent stake in DIPD while Employees’ Provident Fund has 12.76 percent stake being the company’s second largest shareholder.