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Supermax 2Q profit plummets amid US, Canada ban

KUALA LUMPUR (Feb 22): Supermax Corp Bhd's net profit for the second quarter ended Dec 31, 2021 (2QFY22) retreated to near pre-pandemic levels at RM47.84 million, hit by a US market ban and an order freeze in Canada, which added to sharp contraction in margins and industry demand.

Net profit of the fourth largest Malaysian glove maker by market capitalisation fell 92.5% quarter-on-quarter from RM638.52 million, while quarterly revenue fell 64% to RM523.54 million from RM1.45 billion in 1QFY22.

In a results' filing, Supermax cited "intensifying competition with overall glove supply rising significantly" amid production capacity ramp-up by new and existing players for the sharp decline in average selling prices (ASPs).

The situation was "made worse by the imposition of the Withhold Release Order [by the US Customs and Border Protection in October 2021] and freezing of orders from the Canadian government".

On a year-on-year basis, Supermax's 2QFY22 net profit fell 95.48% from RM1.06 billion in 2QFY21, while revenue plunged 73.8% from just under RM2 billion.

Quarterly earnings per share were reduced to 1.83 sen, from 41.04 sen.

For the six-month period ended Dec 31, 2021, Supermax's net profit fell 62.88% to RM686.37 million or 26.22 sen per share from RM1.85 billion or 71.62 sen per share, exceeding the 40.94% decline in half-year revenue to RM1.98 billion, from RM3.35 billion.

Moving forward, the group sees ASPs further declining while demand remains above pre-pandemic levels as the Covid-19 outbreak moves into the endemic phase.

Aside from five new plants under construction, Supermax is also investing in new plants in its overseas markets, including in the US. "This initiative is progressing and more details will be shared when they become available officially," it said.

Additionally, Supermax has downsized its overseas contact lens divisions save for Japan as the business suffered lower demand due to the pandemic. It will focus on appointing distributors and doing private labels for its customers rather than doing its own distribution.

Shares of Supermax fell five sen or 4.39% to RM1.09 on Tuesday, giving it a market capitalisation of RM2.97 billion.


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