Kossan Q1 net profit skids on lower revenue

PETALING JAYA: Kossan Rubber Industries Bhd saw its net profit for the first quarter ended March 31, 2022 (Q1’22) decline 91.4% to RM90.1 million from RM1.04 billion reported in the same quarter of the previous year, attributed to a decline in revenue from its glove and cleanroom division.

Revenue from the quarter stood at RM690.63 million, a 68.5% drop compared with RM2.19 billion previously.

Its glove division saw a profit before tax (PBT) of RM111.01 million in Q1’22, 91.8% lower compared with RM1.36 billion in Q1’21 and the technical rubber products (TRP) division saw PBT ease 21.9% to RM5.08 million in the quarter from RM6.5 million due to higher material cost.

The cleanroom division’s PBT fell 88.6% to RM1.31 million in the first quarter compared with RM11.5 million previously.

With regard to the outlook, Kossan cited normalising demand and average selling prices (ASP) as the industry transition to pre-pandemic levels, heightened competition, logistics woes and increased manpower and energy cost as near-term headwinds for 2022.

“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 nonmedical sectors,” it said.

In line with the group’s longterm growth, Kossan said two new plants with a capacity of 5 billion pieces will be built by the end of next year.

It sees the uptick in economic activity and infrastructure spending auguring well for the infrastructure and automotive segments and consequently translates to its TRP division remaining profitable in this year.

Beyond the Covid-19 pandemic, the group remains upbeat on the glove industry’s prospects and its role in the healthcare sector. Towards this end, Kossan has accelerated its transformation and reinvestments into digitalisation and automation to increase productivity and to prepare for the next phase of growth.

The group is confident of its future prospects and is optimistic of achieving satisfactory results for the current financial year ending Dec 31, 2022.