Supermax posts 3Q net loss of RM39.92mil

KUALA LUMPUR: Supermax Corp Bhd posted a net loss of RM39.92 million for the third quarter ended March 31, 2023 (3Q 2023) from a net profit of RM13.01 million registered in the same quarter last year.

Revenue dropped to RM175.74 million from RM407.80 million a year ago, the latex glove maker said in a filing with Bursa Malaysia today.

It said that compared to a year ago, the worsening operating environment has seen the group’s revenue and losses decline significantly, mainly due to the continued fall in glove average selling prices (ASPs) and rising costs.

The group said ASPs continued to slide in the face of intense market competition, especially from Chinese manufacturers in the nitrile glove segment.

It also said other contributing factors to the weaker performance include loss of sales from a major market as the withhold release order imposed by the United States Customs and Border Protection in October 2021 remains in place.

Besides that, Supermax noted that broader global market demand is slow as a result of overstocking during the peak of the pandemic, and an increase in operating costs including high energy/utility costs.

It also said impairment of fixed assets amounting to RM23 million during the quarter arising from the decommissioning of three older plants also contributed to the weak performance.

On the market prospects, Supermax shared that the demand-supply equilibrium is showing signs of shifting favourably with the improving business dynamics after two years of a downward trend from the peak of the pandemic-led surge.

It observed that ASPs have stabilised in general although they remain close to the lows, especially in the nitrile segment where the Chinese manufacturers with their huge capacities built up during the pandemic years continue to disrupt prices, although noticeably less aggressively than before.

"The stiff competition in the glove market is also seeing new and existing smaller players exiting, especially those that hopped onto the bandwagon at a late stage and are simply too small to be competitive.

"Many existing manufacturers had also scaled down or stopped completely their capacity expansion plans, and some even have taken the opportunity to shut down the older plants and/or productions lines that are no longer efficient,” it said.

As the group refreshes more of its production capacity by replacing old lines with newer high-capacity and high-efficiency lines while maintaining its existing workforce through redeployment to newer plants, it is expected to see productivity improve, per unit costs drop and overall competitiveness and profitability improve going forward, it added. - Bernama