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 KOSSAN 7153  KOSSAN RUBBER INDUSTRIES BERHAD 1Q net profit tumbles 91% to RM90m as glove demand, ASP normalise

KUALA LUMPUR (April 27): Kossan Rubber Industries Bhd posted a 91% plunge in net profit to RM90.1 million in the first quarter ended March 31 (1QFY22) from RM1.04 billion a year ago as demand for gloves and their average selling price (ASP) normalised following greater control of Covid-19 infections worldwide.

Earnings per share declined to 3.53 sen from 40.82 sen.

In a Bursa Malaysia filing on Wednesday (April 27), the glove manufacturer said its quarterly revenue also fell by 68.5% to RM690.63 million from RM2.19 billion due to lower revenue from its gloves and clean-room division.

On a quarterly basis, the group’s net profit tumbled by 58.62% from RM219.07 million in the immediate preceding quarter (4QFY21) while revenue slid by 25.3% from RM924.56 million in 4QFY21.

Competition and incoming supply from existing manufacturers and new entrants are challenges ahead, Kossan said, adding that global logistics disruptions and shipping container shortages have affected glove shipments and deliveries.

“Despite these near-term headwinds, global glove demand is expected to remain on a growth path as a result of a shift in glove usage due to higher healthcare standards and hygiene awareness in both the medical and non-medical sectors.

“In line with the group’s long-term growth, two new plants with a capacity of five billion pieces will be constructed by the end of next year.  

“Beyond the Covid-19 pandemic, the group remains upbeat on the glove industry’s prospects and the vital role it plays within the healthcare sector,” it said.

The group has accelerated its transformation and reinvestments into digitalisation and automation to increase productivity and to prepare for the next phase of growth.

Shares in Kossan Rubber ended three sen or 1.6% lower to RM1.84, valuing the glove manufacturer at RM4.71 billion.

http://www.theedgemarkets.com/article/kossan-rubber-1q-net-profit-tumbles-91-rm90m-glove-demand-asp-normalise

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