KUALA LUMPUR (Nov 9): Kossan Rubber Industries Bhd’s net profit for the third quarter ended Sept 30, 2020 (3QFY20) surged 609% to RM348.74 million from RM49.18 million in the previous corresponding quarter, mainly due to higher sales volume and selling price as demand for rubber gloves continue to outstrip supply amid the Covid-19 pandemic.

Quarterly revenue jumped 95% to RM1.03 billion from RM531.26 million in 3QFY19.

The impressive strong earnings growth, however, is in line with market expectations. According to Bloomberg, analyst consensus forecasts the rubber glove maker's annual net profit to balloon to RM740.6 million for the financial year ending Dec 31, 2020 (FY20) and RM963 million for FY21.

For the nine-month period ended Sept 30, 2020, Kossan's net profit more than tripled to RM544.6 million from RM163.78 million in the year-ago period, while cumulative revenue grew 43% to RM2.35 billion from RM1.64 billion a year ago, mainly supported by the gloves and cleanroom divisions.

In its filing with the bourse, Kossan said it saw improvements in all three of its divisions, namely the gloves, technical rubber products (TRP) and cleanroom business segments.

The gloves division achieved 671% growth in pre-tax profit to RM416.65 million.

The TRP division recorded a 19% increase in pre-tax profit, as the division had resumed full operations since the lockdown imposed under the Movement Control Order (MCO), while also seeing a rebound in deliveries in the infrastructure segment.

The cleanroom division’s pre-tax profit soared 1,132% to RM10.19 million, as demand for the division’s products increased as a result of the Covid-19 pandemic.

For the first nine months of the year, Kossan's net profit more than tripled to RM544.6 million from RM163.78 million in the year-ago period, while cumulative revenue grew 43% to RM2.35 billion from RM1.64 billion a year ago, mainly supported by the gloves and cleanroom divisions.

Looking ahead, the group noted the exponential growth in demand for personal protective equipment due to the pandemic and said demand continues to exceed supply in its gloves division.

“The increase in average selling price has started to be reflected in the current quarter, and the group expects further significant upward price adjustments on a quarter-on-quarter basis in 4QFY20,” said the group.

Meanwhile, Kossan said the TRP division will benefit from the gradual uptick in economic activity and infrastructure spending domestically and regionally, as it serves the infrastructure and automotive segment.

“Management is confident of a further step-up in revenue and profit growth in the fourth quarter and for FY20 to be an exceptional growth year for the group,” it said.

Kossan rose one sen or 0.13% to close at RM7.50 for a market capitalisation of RM19.18 billion.