KUALA LUMPUR (Nov 23): Kossan Rubber Industries Bhd reported a 34% year-on-year (y-o-y) rise in third-quarter net profit on higher volume of gloves sold, efficiency gains in the manufacturing process, as well as effective cost controls.

Net profit rose to RM45.68 million in the three months ended Sept 30, 2017 (3QFY17), from RM34.02 million a year ago, despite higher raw material costs during the quarter under review.

Earnings per share in 3QFY17 rose to 7.14 sen, from 5.32 sen in 3QFY16. Quarterly revenue also came in 18.1% higher at RM489.18 million, from RM414.04 million in 3QFY16.

For the cumulative nine months (9MFY17), Kossan’s net profit rose 9% y-o-y to RM137.72 million, while revenue increased 20.3% y-o-y to RM1.48 billion.

On prospects, Kossan said the demand for gloves remains robust, with the group’s production plants running at full capacity.

“The group’s latest Plant 16 located along Jalan Meru was initially expected to be completed in July 2017. However, there was a slight delay due to machine installation and water supply issues," the company said in a filing with Bursa Malaysia.

“We expect contribution from this plant for this year to be minimal, with full contribution to start from January 2018. Plant 16 which has an installed capacity of 3 billion pieces per year will focus on the group’s patented low derma technology gloves," the filing added.

Two of the eight production lines were completed in October, which are now under production-trial, with the rest six lines to be completed by December.

“Construction works for Plant 17 and 18, also along Jalan Meru, have commenced and are expected to be completed by 2018,” Kossan said.

The company added that the two new plants will be capable of producing a combined 4.5 billion pieces of nitrile gloves per year, once completed.

“Research and development (R&D) remains one of the cornerstones of Kossan’s success. The construction of the group’s integrated R&D cum training centre is [expected to] complete in the fourth quarter of 2017.

“With the strong demand of gloves and improvement in production efficiency, management is optimistic of the performance for the remaining quarter of the year,” the filing said.

Kossan shares closed down 2 sen or 0.24% at RM8.13 today, for a market capitalisation of RM5.2 billion.