Kossan makes RM131mil profit in Q2, sees strong growth over the next two quarters

KUALA LUMPUR: Kossan Rubber Industries Bhd said expanding production capacity and rising average selling prices to bolster growth this year after the glove maker reported a 135% jump in second quarter earnings.

Net profit in the three-month ended June 30 soared to RM131mil compared with RM55.9mil made a year earlier.

Revenue swelled to RM701mil from RM550mil previously, the company said in a filing with Bursa Malaysia today.

Demand for medical gloves had been surging since early this year due to the Covid-19 pandemic.

"With our selling prices for gloves quoted 45-60 days before delivery, the increase in prices started to be reflected in June 2020 and we will definitely see a significant quarter-on- quarter increase in average selling prices in the 3rd quarter and especially in the 4th quarter of FY2020," Kossan said.

"With additional capacity of around 15% - 20%, management is confident of a further step-up in revenue and profit growth on a quarter-on-quarter basis in the 3rd quarter and more significantly in the 4th quarter of FY2020," it added.

The Malaysian Rubber Glove Manufacturers Association (MARGMA) in July projected global glove demand to grow 20% to 330 billion pieces in 2020 (2019: 298 billion pieces).

Malaysia, the leading glove producer in the world, is expected to export 220 billion pieces of gloves valued at RM21.8bil in the current year compared with 170 billion pieces worth RM17.4bil in 2019.