Monday 29 May 2023
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KUALA LUMPUR (Aug 26): Glove maker Supermax Corp Bhd saw its net profit drop below the RM1 billion mark for the first time in the fourth financial quarter ended June 30, 2021 (4QFY21), after breaching the mark for two straight quarters, due to lower average selling prices (ASPs) as more glove supply becomes available in the market.

It posted a net profit of RM958.71 million in 4QFY21, down 4.6% from RM1.01 billion in 3QFY21. Revenue for the quarter was also lower by 3.2% to RM1.88 billion, compared with RM1.94 billion in 3QFY21.

On a year-on-year (y-o-y) basis, however, Supermax's net profit rose 140.4% from RM398.83 million in 4QFY20. This resulted in a higher earnings per share of 36.93 sen in 4QFY21, compared with 15.26 sen in 4QFY20. Quarterly revenue more than doubled from RM929.12 billion a year ago.

Supermax declared a special dividend of 15 sen per share for FY21, payable on Sept 30. This brings total dividends for the year to 31.8 sen per share. It did not declare any dividend in FY20.

For the full year FY21, Supermax saw net profit jump more than seven times to RM3.81 billion, from RM524.8 million in the previous year. Revenue also increased 236.06% to RM7.16 billion, from RM2.13 billion in FY20.

In a bourse filing today, Supermax said it expects demand for gloves as a personal protective equipment to remain strong, as the world continues to fight the Covid-19 pandemic.

"Since the start of the pandemic, we have seen and continue to see the emergence of new consumers and new consumption not previously seen before prior to Covid-19," it said.

“Governments all over the world have increased healthcare spending budgets to contain the effects of the pandemic and in preparation of possible more waves. In light of this, we expect the demand to remain buoyant beyond 2021,” it added.

It noted that the Covid-19 vaccines are being rolled out in an increasing number of countries, which is widely expected to cause glove demand and consumption to moderate.

Still, the group believes that it will likely be gradual and not drop sharply due to the structural change in consumption, such as new consumption, new customers and greatly heightened healthcare and hygiene awareness.

"In view of the surge in demand, there are more new glove players jumping onto the bandwagon. In addition, the current players are increasing capacity on a large scale, especially from players who are public-listed companies based in China, Malaysia and in Thailand.

"As more new capacity is available in the market, the global glove prices have begun to decrease. The glove prices have since dropped substantially. Currently, the spot market prices are very much lower than the contracted prices," it said.

Supermax shares closed down six sen or 1.91% at RM3.08 today, bringing a market value of RM8.38 billion. The stock saw 8.03 million shares traded. Its share price has fallen 70% over the past year.

Edited ByKang Siew Li
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