Rising production cost, lower prices weigh on Supermax profit

PETALING JAYA: An increase in production cost and lower average selling prices saw Supermax Corp Bhd’s net profit for the first quarter ended Sept 30, 2019 (Q1’20) falling to Rm24.74mil compared with Rm35.94mil in the same period a year ago.

Revenue increased marginally to Rm369.9mil from Rm367mil posted a year ago. However, on quarter to quarter basis, net profit rose 78.2% as a result of the sudden spike in rubber latex price in the previous quarter.

In a statement, the glove maker said its balance sheet remains healthy with a current ratio of 1.04 times and a cash and cash equivalent position of Rm188.7mil.

Expansion wise, by calendar year 2020, Supermax is on track to increase its production capacity from 24 billion to 27.4 billion pieces through the completion of Plant #12 and rebuilding and replacement plan.

It also plans to construct another three plants through the proposed acquisition of industrial lands in Meru, Klang.

This will span over five years and increase the production capacity to 44.1 billion pieces per year. Going forward, the group said it will continue to focus on improving revenue and earnings. “The demand for disposable gloves remains robust.

“This is due to as aof various factors including healthcare awareness, healthcare reforms whereby these factors mandate usage of gloves in the medical and other sectors, and rising consumption from the non-traditional users such as the beauty sector and even household users.

“The ongoing Us-china trade war has also shifted US glove buyers to divert their orders away from China and this will likely increase our sales in the US market.

“As for the contact lens division, it will continue to secure new licences and product approvals while doing market penetration through active promotion and new product introduction such as colour lenses.

“As for the contact lens division, the group will continue to secure new licences and product approvals while doing market penetration through active promotion and new product introduction such as colour lenses,” the company said.