KUALA LUMPUR (Nov 29): Supermax Corp Bhd logged a net loss of RM2.05 million in the first quarter ended Sept 30, 2023 (1QFY2024), marking the group's fourth straight loss-making quarter, as revenue shrunk amid weaker demand and persistent lower selling prices.
Nevertheless, its quarterly loss narrowed from the preceding three quarters. The glove maker recorded a loss after tax of RM108.07 million in 2QFY2023, RM39.91 million in 3QFY2023 and RM7.17 million in 4QFY2023.
Its loss per share stood at 0.08 sen, as opposed to earnings per share of 0.21 sen in 1QFY2023, when the group recorded a net profit of RM5.71 million a year ago.
Quarterly revenue dropped 28.2% to RM177.96 million from RM247.96 million in 1QFY2023, said the glove maker in a bourse filing.
Supermax’s dismal performance has been attributed to continued weak demand as buyers continued to run down their heavily over-stocked positions post-pandemic, and a loss of sales revenue from a major market, such as the US, due to the Withhold Release Order (WRO) imposed by the US Customs and Border Protection (USCBP) in October 2021.
However, the WRO has been uplifted with effect from Sept 18, 2023.
On top of that, the manufacturer’s earnings were also dragged down by low average selling prices (ASPs) due to stiff competition, especially from manufacturers in China and Thailand.
On its prospects, Supermax said ASPs for gloves remain suppressed and it expects meaningful market recovery may only take place sometime late into 2024.
“At the present time, new contracts secured by the Supermax Group are at prevailing low prices and low margins. The group 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.
“Cost management measures have helped to improve the group’s profitability in the recent quarter but natural gas prices are expected to rise in the coming quarters and may result in margins squeeze again,” it added.
The group also noted that the over-supply situation is expected to moderate gradually as more and more of the smaller players exit the market, and as some of the bigger players also scale back their expansion and retire older factories and production lines.
Supermax has shut down four of its older plants over the last two years, with plans to build six new modern and more efficient manufacturing blocks still in place, with production lines being installed gradually at a pace that takes into account the current and expected market conditions.
The construction of the group’s US plant is underway and very much in response to the steps taken by an increasing number of countries, including the US, to shore up domestic production to ensure security of supply, especially in times of crises, it added.
Supermax’s share price has staged a strong rebound since the start of the month. The stock climbed 78 sen on Nov 1 to a high of RM1.05 on Tuesday. It closed at RM1.03 on Wednesday, bringing the group a market capitalisation of RM2.8 billion.