Karex not affected by increase in latex prices

  • Business
  • Wednesday, 30 Nov 2016

Report for minister: Karex chairman Tan Sri Arshad Ayub (left) and Goh (right) presenting the company’s annual report to Mah. – Bernama

PORT KLANG: Condom maker Karex Bhd has not felt the rise of latex prices much as latex costs only constitute about 18% of the company’s total costs.

Chief executive officer Goh Miah Kiat said at a press conference after a press tour of its factory that other cost components played a more significant role in the business.

“It is not as big as what you think it is. In fact, if you look at a box of condoms, there are a lot more in terms of packaging, chemicals and lubricants. The rubber price increase is not very significant and we are not really worried about it because we can eventually transfer the price to the consumers,” Goh said.

“We think that the current price of latex at about RM6 per kg is still a comfortable level for us. We do not like to be hit by volatility, such as when the price is too low, the rubber tappers would not earn enough to survive and they may start cutting down the trees and we will have no more supply of rubber,” he added.

He said that there has to be a balance to ensure that supply and demand dynamics are in equilibrium.

Meanwhile, Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said rubber-related exports have continued to grow, rising to RM33bil last year.

“The perception that the rubber industry is a sunset industry is wrong. Karex uses the latest technology of which the machines are also fabricated in Malaysia. We are confident that rubber exports will continue to grow and we encourage more downstream rubber activities,” Mah said.

He said the recent rise in rubber prices (SMR20 at RM8 per kg) bodes well for smallholders and rubber tappers as they produced 95% of the total rubber output in the country.

On another matter, Goh believes the company will still continue to grow in line with global demand for condoms for their role in disease prevention.

“For the industry, actually about 50% of total volumes are purchased by governments around the world, and we are one of the largest suppliers to fight HIV and Aids. The United Nations had told us earlier this year that there is a big funding gap in Europe because of the refugee crisis,” Goh said.

Separately, Karex announced to the stock exchange its first-quarter ended Sept 30 results that saw net profit decline by 63.5% to RM8.13mil compared to the same quarter a year ago on lower gains from foreign exchange and higher distribution expenses, as well as one-off corporate exercise expenses. Revenue was 5.2% lower at RM80.03mil.

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