Supermax net profit plunges 96% to RM33mil in 4Q

KUALA LUMPUR: Supermax Corp Bhd’s net profit plunged 96.6% to RM33.05mil, or earnings per share (EPS) of 1.25 sen in the fourth quarter ended June 30 (4Q) against RM962.5mil, or 37.08 sen EPS a year earlier.

Its revenue saw a steep fall of 84% to RM 300.2mil from RM1.87bil compared to the corresponding quarter a year ago.

The glovemaker said the average selling prices (ASPs) and demand continue to come off the highs recorded a year ago at a time when the worldwide Covid-19 pandemic fears were at or near its peak.

“Sales continue to be adversely impacted as the Withhold Release Order (WRO) imposed by the US Customs and Border Protection (USCBP) in October 2021 remains in place and the Canadian government having suspended orders and deliveries from Supermax,” it said in a Bursa Malaysia.

In addition, it said importers and distributors including Supermax’s overseas distribution units have had to sell high-priced inventory at falling market prices since end-CY2021.

Supermax said the increased operating costs caused by unfavourable factors and increase in minimum wages also added to the factors affecting its profitability.

The group has proposed a final single-tier dividend of 3 sen per ordinary share for the financial year ended June 30, (FY22), subject to shareholders’ approval at the upcoming annual general meeting to be held later this year.

For FY22, Supermax posted a net profit of RM732.43mil, down 80.8% from RM3.81bil while revenue tumbled 62.5% to RM2.69bil against RM7.16bil last year.

According to Supermax, the rubber glove industry is currently well into a consolidation phase, after having gone through its strongest ever growth phase historically in 2020 and 2021, triggered by the Covid-19 pandemic that had spread across the globe.

“The sector’s strong growth spurt had attracted many new players into the market and encouraged existing players to ramp up production capacity to capitalise on the surging demand,” it said.

This resulted in an over-supply situation coupled with demand normalising has seen ASPs for gloves track lower from their record highs.

“We expect to see continued major consolidation in the rubber glove industry as ASPs and demand continue to moderate from the record highs seen at the peak of the Covid-19 pandemic.

“Nevertheless, the structural shift triggered by the pandemic will see demand remain at a higher level compared to the pre-pandemic period and resume a longer-term upward trend once the current demand-supply disequilibrium rebalances in time.

“Going forward, we are expecting the market to remain weak, competition continues to be intense and the profit margins continue to moderate,” Supermax said.