Glove makers' shares retreat on Thursday

Glove makers' shares retreat on Thursday
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KUALA LUMPUR (Nov 3): Shares of glove makers retreated on Thursday (Nov 3), after Kossan Rubber Industries Bhd reported that its net profit for the third quarter ended Sept 30, 2022 (3QFY2022) plunged 95.6% to a decade-low of RM23.26 million.

At the time of writing, Hartalega Holdings Bhd was the biggest loser in percentage terms, shedding 9.13% or 20 sen to RM1.99, followed by Kossan, which was down by 8.33% or 10 sen to RM1.10.

Top Glove Corp Bhd fell 8.02% or 6.5 sen to 74.5 sen, while Careplus Group Bhd shed 7.77% or four sen to 47.5 sen; Supermax Corp Bhd declined 5.82% or 5.5 sen to 89 sen, followed by Adventa Bhd (down 5.63% or four sen to 67 sen), and Hextar Healthcare Bhd (down 5.43% or 2.5 sen to 43.5 sen).

The Bursa Healthcare Index, of which glove makers are constituents, fell by 4.14% or 70.47 points.

Kossan’s 3QFY2022 net profit plummeted year-on-year on lower average selling prices and volume, with its basic earnings per share also falling sharply to 0.91 sen from 20.96 sen.

Quarterly revenue declined 56.97% to RM560.52 million from RM1.3 billion in the same period a year ago due to the decrease in revenue from its gloves and clean-room divisions.

The topline of its glove division contracted by 61.9% to RM464.17 million from RM1.22 billion in 3QFY2021, due to lower ASPs and volume sold. Higher energy and labour costs due to the increase in natural gas tariffs and higher minimum wage also affected its performance.

The group’s clean-room division posted RM31.66 million in revenue, down 31.7% from RM46.36 million in 3QFY2021, due to lower ASPs in clean-room products.

Kossan said the glove industry will continue to face challenges in terms of oversupply arising from surplus capacity created during the pandemic, overstocking and subsequent inventory adjustments from customers, that have cut average selling prices significantly, combined with high energy costs arising from the Ukraine-Russia conflict and higher minimum wage.

"As such, until the demand-supply disequilibrium eases, the group expects to encounter strong headwinds for the remaining quarter of FY2022 and FY2023,” it said.

Read also:
Kossan 3Q earnings plummet 96% to RM23m, lowest in a decade

Lam Jian Wyn