KUALA LUMPUR (Feb 22): Kossan Rubber Industries Bhd's fourth quarter net profit rose 2.4% to RM46.5 million, from RM45.4 million a year earlier, mainly on a better showing by its gloves division.

Earnings per share for the quarter ended Dec 31, 2017 (4QFY17) increased to 7.18 sen from 6.98 sen previously, the group said in a filing with Bursa Malaysia.

Revenue grew 9% to RM477.8 million from RM438.2 million in 4QFY16.

The glove division saw an 8.8% rise in revenue to RM414.3 million and a 24.4% jump in profit before tax (PBT) to RM53.6 million.

This comes on the back of a 3% increase in its average selling prices (ASP), 5% increase in the volume sold, efficiency gains in the manufacturing process and increased automation as well as effective cost controls.

The technical rubber products (TRP) division, however, saw its PBT fall by 49.3% to RM4.4 million in 4QFY17 despite its revenue rising 10.3% to RM42.2 million.

The higher revenue was due to higher sales deliveries while PBT was lower due to the stronger ringgit against the US dollar, along with a provision for doubtful debts amounting to RM2.07 million.

The cleanroom division, meanwhile, recorded a higher revenue of RM20.2 million but PBT was lower at RM0.64 million.

For the full financial year, Kossan saw its net profit increase 7.9% to RM185.6 million or 28.77 sen a share, from RM172 million or 26.13 sen a share in FY16.

Revenue also rose 17.4% to RM1.96 billion from RM1.67 billion in FY16.

The gloves division's FY17 revenue was up 19.2% to RM1.72 billion as the ASP went up 7%, arising from the increase in raw material prices, and volume sold rose by 6%.

The division's PBT grew 17.5% to RM209.9 million, driven by continued strong demand growth for its glove products on the back of the increase in volume sold with the production plants continuing to operate at full capacity, improvement in manufacturing efficiency, increased automation and effective cost controls despite the higher raw material prices.

The TRP division recorded a revenue of RM162 million for FY17 as compared with RM160.6 million in FY16, an increase of 0.9% while PBT fell by 47% to RM16.2 million in FY17.

"PBT was lower mainly due to the market remained challenging and a surge in raw material prices," said Kossan.

Kossan said the glove industry's prospect remains robust. It said its existing production plants are running at full capacity, while its latest plant located along Jalan Meru, Klang will start contributing to group's earnings in 2018.

It added that construction works for another two plants at Jalan Meru have commenced and are expected to be completed by 2018. They have the capability to produce up to 4.6 billion pieces of nitrile gloves per annum once completed.

Kossan's share price closed unchanged at RM8.70, for a market capitalisation of RM5.56 billion. At the current level, the stock is trading at a trailing P/E of 30.3 times. Compared to a year ago, the share price has gained by 35.4%.