Supermax profits plunge on falling demand for rubber gloves

 

Glove maker Supermax said a continuing ban by US Customs has also affected sales of its products. (Bloomberg pic)

KUALA LUMPUR: Glove maker Supermax Corporation Bhd has recorded a steep fall in net profits to RM732 million from RM3.82 billion a year ago due to a fall in demand for rubber gloves and a continued decline in average selling prices.

Revenue also slipped to RM2.69 billion from RM7.16 billion previously, the company said in a filing with Bursa Malaysia today.

The board of directors will propose a final single-tier dividend of three sen per ordinary share in respect of the financial year ended June 30, 2022 for the approval of the shareholders at the forthcoming annual general meeting.

Supermax also reported a lower net profit of RM33.05 million in its fourth quarter ended June 2022, compared with RM962.53 million in the same period last year. Revenue decreased by 84% to RM300.23 million from RM1.87 billion a year ago.

It said the declining profitability was due to a combination of factors with sales prices and demand continuing to come off the highs recorded a year ago at a time when worldwide fears over the Covid-19 pandemic were at or near its peak.

Sales were also adversely impacted as the withhold release order imposed by US Customs and Border Protection in October 2021 remained in place; the Canadian government had also suspended orders and deliveries from Supermax.

“Other factors include importers and distributors including Supermax’s overseas distribution units having had to sell high-priced inventory at falling market prices since the end of calendar year 2021 and increased operating costs caused by unfavourable factors and increase in minimum wages,” the group said.

Supermax expects to see continued major consolidation in the rubber glove industry as prices and demand continue to moderate from the record highs seen at the peak of the pandemic.

However, 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.

“We are expecting the market to remain weak, competition to be intense and profit margins to continue to moderate,” the company said. - FMT