KUALA LUMPUR (Nov 20): Kossan Rubber Industrial Bhd's net profit for the third quarter ended Sept 30, 2014 (3QFY14) was down marginally by 2.82% to RM34.4 million, from RM35.41 million a year ago.

The company attributed the lower net profit and revenue to the drop in contributions from its technical rubber division and clean-room division.

Quarterly revenue fell 1.6% to RM328.35 million, from RM333.55 million previously, due to the same reason.

Earnings per share (EPS) also came in slightly lower at 5.38 sen, from 5.54 sen a year earlier.

In a filing with Bursa Malaysia today, Kossan Rubber said its gloves division recorded lower turnover due to lower selling prices, as a result of lower raw material cost.

In term of quantity, Kossan Rubber said it sold more gloves and had produced higher profit. But the earnings was affected by an unrealized loss in derivatives in hedged US dollar, amounting to RM 1.84 million, arising from a total nominal value of RM 117.628 million hedged.

"For clean-room division, it continues to perform to expectation with increased turnover, while profitability was affected by expansion and professional 'trade mark' fees of the trading company," it added.

For the nine months ended Sept 30 (9MFY14), Kossan registered a net profit of RM105.83 million or 16.55 sen per share, up 3.66% compared to RM102.09 million or 15.96 sen last year.

Going forward, Kossan Rubber is positive of increased turnover and profitability from its gloves division, as world demand continues to grow.  

"Competition is strong in the gloves market. However management is confident with the state of the art manufacturing lines giving high production output with efficient cost savings, and our strong product mix in nitrile and natural rubber gloves, we are fully confident to compete and perform in this competitive market," it said.

Kossan Rubber said the current order for their gloves is fully taken up for the remaining quarter of 2014.  

The remaining two plants, namely Plant (2) and Plant (3), are expected to have their commercial productions in November 2014 and January 2015 respectively.  

"The three new plants, when fully operational in the fiscal year of 2015, will enlarge the group's installed capacity from the existing of 16 billion to 22 billion pieces of gloves per annum," it said, and will underpin a stronger performance for 2015.

For its technical rubber division, it said the infrastructure and dock and marine fenders products were performing to expectations, whereas the industrial and automotive parts were experiencing weak demand in the world market.  

Clean-room division meanwhile has completed its capital expansion programme, with improved facilities producing superior quality products.  

"We are working closely with our partners for continued product certification and acceptance, which will ensure continuous growth and profitability," it said.

"Barring any unforeseen circumstances, the group is optimistic to deliver a better set of performance in the remaining quarter of 2014," it added.

Kossan Rubber share price was unchanged at RM4.54, giving it a market capitalisation of RM2.9 billion.