RUBEREX (7803) RUBBEREX CORP (M) BHD 3Q net profit falls 36% to RM25m on lower ASP, production efficiencies and labour limitations

RUBEREX (7803) RUBBEREX CORP (M) BHD 3Q net profit falls 36% to RM25m on lower ASP, production efficiencies and labour limitations

KUALA LUMPUR (Nov 26): Rubberex Corp (M) Bhd registered a net profit of RM25.22 million for its third quarter ended Sept 30, 2021 (3QFY21), 36.2% lower than last year’s RM39.52 million, due to lower average selling price (ASP), lower production efficiencies due to slower order uptakes by customers and labour restrictions due to Covid-19.

Earnings per share fell to 2.98 sen from 4.71 sen, Rubberex’s bourse filing on Friday (Nov 26) showed.

Quarterly revenue also dipped by 12.9% at RM94.9 million, from RM109.03 million last year.

“Our focus is on nitrile disposable gloves as the key sales driver for the group. We envisage demand for nitrile disposable gloves to persist globally, amidst heightened safety and hygiene awareness post pandemic,” said Rubberex’s managing director Khoo Chin Leng.

He added that glove ASPs and material costs are expected to stabilise once the endemic phase of Covid-19 is achieved globally. “With the group current workforce now fully vaccinated, production efficiencies are also expected to improve in the forthcoming financial quarters," he added.

On a quarter-to-quarter basis, Rubberex saw its net profits decline by 61% at RM25.22 million from RM64.66 million last quarter, while revenues were down to RM94.9 million from RM176.61 million. Earnings per share had also declined to 2.98 sen, from 7.78 sen from a quarter ago.

For the nine months ended Sept 30, 2021 (9MFY21), the group recorded a doubling in net profit of RM176.45 million, higher than RM71.74 million, as well as revenues of RM446.75 million, from RM263.56 million last year. Earnings per share for the nine months stood at 20.86 sen, from 8.54 sen.

The group added it has substantial cash balances and zero borrowings on its books at the end of the quarter, which bodes well for its future diversification and investment plans it disclosed earlier last month.

Rubberex had earlier announced that it proposes to undertake a joint collaboration with several parties for the development and operation of Empire City Mall that is currently being constructed as part of the overall development of Empire City in Petaling Jaya, Selangor.

“This investment would entail the subscription of shares by cash in a joint venture company, Alliance Empire Sdn Bhd, for a 20% equity interest amounting to RM180 million,” it said in a separate statement.

Meanwhile, Datuk Eddie Ong Choo Meng, Rubberex’s sole largest shareholder, said: “Rubberex’s diversification into property investment is well-timed to capitalise on the country’s progressive revitalisation, as well as the reopening of other economies globally… This investment is also in line with the group’s long-term strategy of delivering sustainable growth and returns to our shareholders” while reaffirming his support and commitment to the group’s glove business.

Shares of Rubberex traded 6 sen or 11.65% higher to close at 58 sen on Friday (Nov 26), giving the glove maker a market capitalisation of RM526.41 million.

http://www.theedgemarkets.com/article/rubberex-3q-net-profit-falls-36-rm25m-lower-asp-production-efficiencies-and-labour