KUALA LUMPUR: Glove maker Supermax Corp Bhd said its profit margins remained at near record levels in the third quarter ended March 31, but warned that glove prices have started to retreat from recent highs.
"As more new capacity is available in the market, the global glove prices have begun to decrease," Supermax said in a statement today.
"The glove prices have since dropped by between 15% to 25%," it added.
Supermax posted a net profit of RM1bil, or 38.8 sen a share in the three-month ended March 31.
Revenue stood at RM1.94bil The company has declared a special dividend of 13 sen a share.
"The Group would have recorded an even stronger performance were it not for the temporary closure at the Meru plants to do a complete sanitisation and deep-cleansing exercise following the detection of several Covid-19 cases among the foreign workers," Supermax said.
This resulted a loss of production output in the month of February at its plants in Meru, Selangor that impacted its sales.
Going forward, Supermax said competition in the glove industry has intensified.
Glove prices have soared since March 2020 as governments worldwide scrambled to stock up the protective gear.
"In view of the surge in demand, there are more new glove players jumping into the bandwagon. In addition, the current players are increasing capacity in large scale especially from players who are public-listed companies based in China, Malaysia and in Thailand," it said.
But with vaccines being rollout worldwide, demand for gloves has also tapered down, keeping a lid on prices.
"Currently, the spot market prices are lower than the contracted prices," Supermax said.
But despite the looming glut in supply, Supermax is forging ahead with its expansion plans.
In Malaysia, Supermax had completed the commissioning of the remaining production lines in Block B of Plant #12 during the preceding quarter, adding 2.2 billion to the Group’s annual installed capacity.
"We are seeing a full quarter contribution in the quarter ending March 2021 and going forward," it said.
Supermax is currently building five glove manufacturing plants concurrently and scheduled for completion progressively between now and year 2022.
"The new plants will add 22.25 billion new capacity bringing the Group’s total capacity to 48.42 billion gloves by end 2022," it said.
Supermax said it would invest total capital expenditure of RM1.39bil for the new plants.
Meanwhile, the group is working with various government agencies in the US to identify suitable manufacturing site.
"We have to-date received approval from a State Government, Capital Investment Tax Credit (CITC) with Projected Capital Investment of US$482mil," it said.
"We are currently working with another State for a similar or better Capital Investment Incentives before making the final decision on the State and the Shortlisted Site where the project would be located," it added.