KUALA LUMPUR (Aug 29): Glove maker Supermax Corp Bhd posted an annual net loss of RM149.45 million for its financial year ended June 30, 2023 (FY2023), against an annual net profit of RM718.91 million in FY2022, as earnings were weighed by lower sales and average selling price (ASP) for gloves, amid persistent oversupply in the market.

With the latest annual loss of RM149.45 million, it recorded a cumulative loss per share of 5.67 sen, as opposed to a cumulative earnings per share of 27.26 sen in FY2022 previously. Annual revenue was RM821.86 million, down 69.42% from RM2.69 billion previously, the group's filing with Bursa Malaysia showed.

It closed its FY2023 with a quarterly net loss of RM7.17 million for the fourth quarter ended June 30, 2023, marking the group’s third straight loss-making quarter — albeit with net loss narrowing from RM39.92 million in 3QFY2023 and RM108.07 million in 2QFY2023. It recorded a loss per share of 0.27 sen in 4QFY2023, as opposed to an earnings per share of 0.74 sen in 4QFY2022, when the group made a net profit of RM19.53 million.

Quarterly revenue fell 25.6% to RM223.37 million, from RM300.23 million a year ago. Similarly, the latest quarterly revenue was better than the RM175.74 million topline it made in 3QFY2023 and the RM174.79 million it recorded in 2QFY2023.

The latest quarterly loss is still due to lower ASP for gloves and sluggish demand in the broader global market, as buyers continued to wind down their over-stocked positions, said Supermax. 

The group’s earnings were also hit by the loss of sales due to the Withhold Release Order (WRO) imposed by the US Customs and Borders Protection in October 2021, which remains in place, as well as increased operating costs amid higher utility costs.

Moving forward, Supermax said the over-supply situation is expected to moderate gradually as more of the smaller players exit the market, while some of the big players scale back their expansion and retire older factories and production lines.

Supermax itself has shut down four of its old plants over the last two years. While its plan to build six new modern and more efficient manufacturing blocks is still in place, these production lines are being installed gradually at a pace that takes into account the current market conditions.

Nevertheless, it expects gloves ASPs to remain suppressed, saying a meaningful market recovery may only take place sometime late in 2024.   

As it is, new contracts the group secured currently are at prevailing low prices and low margins, said Supermax, who does not expect to see a significant improvement in performance in the near to medium term owing to the high volume of high-priced stocks at its overseas distribution centres.

Meanwhile, the group is continuing to engage with the US Customs and Border Protection to demonstrate the huge strides it has made in improving its human resource policies and procedures, including actively reaching out to all former workers for remediation. The group has thus far paid out a total of RM 41.2 million in remediation payments to existing and former workers.

The construction of its US plant is also underway and very much in response to the steps taken by an increasing number of countries, including the US, to re-shore or shore-up domestic production to ensure security of supply especially in times of crises, the group added.

Supermax shares fell one sen or 1.26% to close at 78.5 sen on Tuesday, giving the group a market capitalisation of RM2.14 billion.