KUALA LUMPUR (Feb 22): Kossan Rubber Industries Bhd expects the challenging operational landscape to continue throughout the financial year (FY2024) amid persistent supply-demand imbalance in the market, after reporting the lowest annual earnings in 17 years.

As the market experiences realignments due to industry consolidation and capacity rationalisation, pressure on average selling prices from international competitors is likely to persist, the glove maker told Bursa Malaysia on Thursday.

Kossan’s remarks came after the group’s net profit tumbled 98.03% to RM14.22 million or 0.56 sen per share for the financial year ended Dec 31, 2023 (FY2023) — the lowest since FY2006 — against RM157.1 million or 6.14 sen per share recorded for FY2022.

The lower annual earnings was due to one-off impairment loss and write off of plant and machinery amounting to RM35.38 million and RM4.41 million respectively.

This was compounded by lower sales volume as well as average selling prices and higher natural gas.

Meanwhile, its revenue for FY2023 shrank 32.34% to RM1.59 billion from RM2.34 billion a year earlier.

It nonetheless declared a two sen dividend per share for FY2023 to be paid on April 8 this year, down from 2.5 sen per share last year.

For the fourth quarter ended Dec 31 (4QFY2023), Kossan posted RM806,000 net profit versus RM2.49 million net loss recorded for 4QFY2022 on higher operating profit, although revenue declined 16.89% to RM400.15 million from RM481.45 million.

On a quarter-on-quarter basis, the group’s net profit tumbled 98.03% from RM40.97 million registered for 3QFY2023 while revenue slipped 0.83% from RM403.48 million previously.

“Despite these immediate market challenges, the long-term outlook for glove demand remains optimistic, driven by increasingly stringent standards and heightened hygiene awareness in both the medical and industrial sectors,” the glove maker told Bursa Malaysia on Thursday.

“The group is dedicated to sustaining effective cost management while concurrently accelerating the digitisation and automation of operations to overcome manpower challenges. This strategic approach is aimed at enhancing overall productivity, efficiency, and mitigating production costs,” it added.

Shares of Kossan closed up three sen or 1.51% to RM2.02 at Thursday’s closing bell, valuing the group at RM5.17 billion. In the past year, its share price has risen by over 87%.