Kossan’s Q1 net profit jumps 10.35% on higher volume

PETALING JAYA: Kossan Rubber Industries Bhd has recorded a 10.35% jump in net profit to Rm64.8mil on the back of a 8.9% jump in revenue to Rm611.47mil for its first quarter ended March 31. Earnings per share increased to 5.07 sen from 4.59 sen.

The improved performance was mainly attributable to higher volume in the gloves division, which improved by 7.4% as compared with the first quarter of 2019.

Like its other glove compatriots, Kossan’s share price has also more than doubled on a year-to-date basis. The stock, which was at the RM4.16 level at the beginning of the year, closed yesterday at RM8.63.

For the first quarter, Kossan’s technical rubber products (TRP) division recorded a revenue of Rm38.39mil, easing 17.75% as compared with Rm46.68mil in the same quarter of the previous year.

Its pre-tax profit eased 49.27% to Rm3.46mil as compared with Rm6.81mil a year ago. The performance was mainly attributable to lower sales deliveries and sales of lower-margin products.

Meanwhile, the cleanroom division recorded a revenue and pre-tax profit of Rm24.53mil and Rm1.84mil, respectively, in the first quarter, as compared with Rm17.11mil and Rm0.58mil in the same quarter of the previous year.

Looking ahead, Kossan said that due to the Covid-19 pandemic, demand for protective gloves is expected to remain robust.

The Malaysian Rubber Glove Manufacturers Association (MARGMA) projects global glove demand to grow to 345 billion pieces in 2020 (2019: 298 billion pieces), out of which 65% is expected to come from Malaysia, with Thailand and China at 18% and 9%, respectively.

Malaysia is expected to export 225 billion pieces of gloves valued at Rm20bil in 2020 compared with 170 billion pieces worth Rm17.4bil in 2019.

Kossan said that the demand for gloves has increased and the supply shortage in the market has driven selling prices higher. “With the group’s continued improvements in operating efficiency, management is confident that financial year 2020 (FY20) will be a strong growth year for the group,” said Kossan.

Separately, Kossan’s second interim dividend of three sen for FY19 will go ex on June 5, while the entitlement date has been set at June 9.