Karex to capitalise on robust condom industry outlook

KUCHING: Karex Bhd (Karex), as the world’s largest condom manufacturer with a 20 per cent global market share, is expected to capitalise on a robust condom industry outlook in the next 10 years.

The research arm of Kenanga Investment Bank Bhd (Kenanga Research) in a initiate coverage report reported that the global condom market is on an impressive growth trajectory as it is projected to nearly double from US$8 to 9 billion in 2022 to US$19 to 23 billion in 2032, representing a robust compound annual growth rate (CAGR) of 8 to 9 per cent.

“This surge is fuelled by heightened consumer awareness, a diverse array of products catering to varied preferences, and global initiatives to curb sexually transmitted diseases (STDs) and sexually transmitted infections (STIs),” they shared.

Karex who produces up to 5.5 billion pieces annually is expected to be wellequipped to ride on this rising industry demand, especially as the group has managed to successfully shift its focus to high margin products and segments, especially in its commercial and Original Brand Manufacturing (OBM) segments.

“This strategic redirection has substantially boosted the company’s profitability, with these segments yielding gross profit margins significantly higher than the tender market, at 20 to 25 per cent and over 50 per cent compared to 7 to 10 per cent,” the research arm highlighted.

As a reflection of this increased profitability, the research arm pointed out that Karex had managed to achieve impressive increases in both its gross profit and operating profit margins during the first quarter of financial year 2024 despite experiencing a slight reduction in revenue.

This refocus on higher margin premium and topquality products is well-aligned with the current market trends and is further supported as raw material prices and freight costs have been stabilising recently.