KUALA LUMPUR (Dec 17): Like its peers in the rubber glove industry, Comfort Gloves Bhd’s earnings continue to be on a decline, a reverse of last year’s trend.

The group’s net profit shrank 69.2% to RM45.85 million for the three-month period ended Oct 31, 2021, from RM148.82 million in the preceding quarter ended July 31, 2021. This is the second consecutive quarter that the glove maker posted lower net profit on a quarter-to-quarter basis.

Its quarterly revenue declined 56% to RM220.93 million from RM504.23 million.

The group’s earnings were also lower on a yearly comparison.

Its net profit was 49% lower against RM90.33 million in the previous corresponding quarter a year ago, while quarterly revenue was down 20% versus RM276.69 million, according to the rubber glove maker’s filing with Bursa Malaysia.

The earnings contraction was mainly caused by lower sales volume from the group’s two factories and foreign worker hostels that were placed under Enhanced Movement Control Order (EMCO) in the quarter under review, said Comfort Gloves in the result release.

“The group has sufficient inventory buffers for at least one month that [are] able to cushion the impact from further disruption to operations and customer orders.

“An unexpected flood incident happened in Matang area on Aug 19, 2021 and those affected inventories were written off amounting to RM4 million, thus still pending for finalisation of insurance claims recovery. However, its impact was partially covered by higher average selling price (ASP)," it said.

Comfort Gloves had recently changed its financial year end to Dec 31, from Jan 31.

For the nine-month period of Oct 31, it registered a 177% jump in net profit to RM413.81 million from RM149.46 million a year ago, while revenue surged 102% to RM1.27 billion from RM627.55 million.

On prospects, Comfort Gloves anticipated that the business environment will be challenging in the immediate term as competition will be very intense despite the weakening glove demand.

“In view of that, the group is planning to rationalise the existing capacity by upgrading and revamping its production lines as the group has a better competitive advantage to differentiate ourselves by producing premium specialty gloves in which the production capacity can be fully utilised.

“With the advanced production facility, the group is expected to achieve better economies of scale with no idle capacity that will improve the overall profit margin. The ASP has been softening continuously due to the increase of gloves supply,” it added.

Nonetheless, Comfort Gloves expects the global demand for gloves to continue rising in the long term due to the Covid-19 pandemic.

“With recent spread of [the] Delta and Omicron variants, the hygiene awareness will increase, hence the usage and demand for gloves as a protective barrier will also increase in the immediate term.

“Moving forward, the group remains optimistic towards its long-term prospects and well prepared to capitalise the market opportunities to continue growing and succeed for years to come,” it added.

Comfort Gloves’s shares rose six sen or 6.06% to close at RM1.05 with some 7.33 million shares changing hands. Based on its closing price, the group has a market capitalisation of RM612.1 million. Year to date, the stock has fallen 64%.