Aug 02, 2011 (LBO) - Sri Lanka's Dipped Products group said June 2011 quarter net profit shot up 583 percent to 390 million rupees from a year ago with growth in both gloves making and plantations.
Rubber prices levelled off to ease pressure on gloves production costs but remained strong enough to generate adequate margins for its rubber plantations, managing director Mahesha Ranasoma said.
A wage hike given in a deal with labour unions would bring margins under heavy pressure, he added.
The company, part of the Hayleys conglomerate, said earnings per share were 6.52 rupees compared with 95 cents the year before.
Dipped Products' sales rose 43 percent to 4.7 billion rupees in the June 2011 quarter from a year ago, a stock exchange filing said.
The group's hand protection business contributed 3.4 billion rupees, up 33 percent, and plantations 1.5 billion rupees, up 62 percent.
The statement said local manufacturing operations turned in a "substantially improved performance", increasing turnover to two billion rupees on a volume growth of eight percent.
This converted a pre-tax loss of 39 million rupees in the corresponding quarter of the previous year to a profit of 205 million rupees before tax.
Dipped Products Thailand, the group’s medical glove manufacturing operation, increased free on board turnover to 603 million rupees but posted a nominal loss due to poor margins, the statement said.
Sales of ICOGUANTI S.p.A., its Italian marketing company rose seven percent to 968 million rupees.
Ranasoma said rubber prices in the quarter reviewed had played a "pivotal role", levelling off somewhat to ease pressure on cost of production in the hand protection segment, but remaining strong enough to generate adequate margins for its Kelani Valley Plantations subsidiary.
“Our continued emphasis on lean manufacturing also helped keep cost elements in control,” he said, disclosing that as natural rubber prices ease, the group would progressively pass on the corresponding cost reductions to buyers.
A new collective agreement that came into force on April 01, 2011 would bring margins under heavy pressure, he said.
The stock exchange filing said the increased wage costs of 266 million rupees for the June quarter will be adjusted in the group's September quarter financial statements.
The figure includes wage arrears for the period April 1, 2011 to June 30, 2011 and a provision of 187 million rupees for the estimated increase in the retiring gratuity liability arising from the wage deal.
source - www.lbo.lk
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