Dipped Product PLC saw revenues languish and profits plunge amid rising costs in the quarter ended December 31, 2021 (3Q22), as margins came under increasing pressure in line with expectations made at the start of the year. the current fiscal year as demand declined, supply normalized and commodity prices soared.
The Hayleys Group rubber glove exporter reported revenue of 12.73 billion rupees for its fiscal third quarter, up 3% from the same period in 2020.
The company’s gross profit fell sharply by 32% to 2.31 billion rupees while cost of sales increased by 17% to 10.42 billion rupees.
taking a large portion of the company’s revenue to fund its basic production raw materials and other direct costs.
The company’s performance was not entirely out of step with expectations made at the start of the current fiscal year, but it is not immediately clear whether management expected the impact to be as intense after. over a year of top-flight performance since the immediate aftermath. of the pandemic in 2020.
The pandemic fueled additional demand for the company’s industrial and medical gloves, but demand slowly faded in 2021 as the virus in major global economies was brought under control while supplies normalized elsewhere. The ban in place on Malaysia’s Top Glove, the world’s largest disposable glove maker, was also lifted by the United States in the middle of last year, potentially leveling off supplies. Global glove prices also fell sharply, putting further pressure on the company’s margins, as evidenced by gross profit, which plunged.
“The outlook for the industry remains positive through 2021, although demand growth is expected to moderate over the medium term,” said Mohan Pandithage, chairman and chief executive of Hayleys PLC in his annual review of operations last year. “Expanding capacity of manufacturers in the region will put pressure on prices while increases in raw material prices will put pressure on margins,” he added.
The company reported a profit of 1.35 rupees per share or 811.0 million rupees for the quarter under review, compared to a profit of 2.65 rupees per share or 1.59 billion rupees for the same period in 2020, down 49%.
For the nine months to December 31, 2021, the company reported earnings of 5.04 rupees per share or 3.02 billion rupees compared to earnings of 5.86 rupees per share or 3.51 billion rupees the previous year, down 14%.
The company’s hand protection segment generated revenue of Rs 30.25 billion for the nine months, compared to Rs 21.21 billion a year ago. Operating profit was Rs. 3.24 billion compared to Rs. 4.09 billion a year ago.
Meanwhile, the company’s plantations – Kelani Valley Plantations PLC and Talawakelle Tea Estates PLC – reported revenues of 12.75 billion rupees against 11.57 billion rupees a year earlier, while operating profits were 1.24 billion rupees against 1.06 billion rupees.
Businessman Dhammika Perera controlled Hayleys PLC, together with other entities of the group held 57.06% of the capital of Dipped Products as of December 31, 2021, while the Employees Provident Fund held 4.6% of the company, its second shareholder.