This article first appeared in The Edge Financial Daily on February 19, 2019

KUALA LUMPUR: Kossan Rubber Industries Bhd recorded a 29.6% increase in fourth quarter of financial year 2018 (4QFY18) net profit to RM59.51 million, from RM45.91 million in the previous corresponding quarter, due to improvements in all of its three divisions — gloves, technical rubber products (TRPs) and clean room.

Revenue for the quarter ended Dec 31, 2018 rose 23.4% to RM589.37 million, from RM477.77 million previously.

Most significantly, the glove division’s revenue rose 25.4%, with profit before tax increasing by 16.72%, the group said in a filing yesterday.

The improved performance, the group said, was achieved on the back of continued strong demand for the group’s glove products, with higher average selling prices (+7.5%) and higher volume sold (+17.3%).

This was achieved despite a 23.74% increase in the natural gas price and a 11.8% rise in nitrile price. Natural rubber prices were down 19.36% during the quarter.

For the full financial year, Kossan’s net profit grew 10.3% to RM200.78 million from RM182.06 million in the previous year.

At the same time, Kossan recorded its highest ever revenue, surpassing the RM2 billion mark at RM2.144 billion, an increase of 9.5% from RM1.958 billion previously.

The group said the stronger results were mainly attributable to the improved performance in the gloves and TRPs divisions compared with the previous year.

Moving forward, Kossan sees the demand for the group’s glove products to be strong as the capacity for the latest plant (1.5 billion pieces) has been fully taken up, with meaningful contributions expected in the coming quarter.

Meanwhile, construction work for its next two plants (with a capacity of 2.5 billion pieces and three billion pieces) is currently on track, with expected full commissioning by 2Q and 4Q of 2019 respectively.

“With the group’s expansion plans and new capacity coming on stream, continued demand for our gloves, a clear focus on cost savings, product quality and innovation, as well as improvements in production technology and operating efficiency, management is confident that FY19 will be a growth year for the group,” said Kossan.

Shares of Kossan rose 20 sen or 5.26% yesterday to close at RM4 with a market capitalisation of RM5.116 billion.