Supermax 3Q net profit drops 99% as gloves ASP and demand subside; declares 3 sen dividend

KUALA LUMPUR (May 25): Supermax Corporation Bhd’s net profit in the third quarter ended March 31, 2022 (3QFY22) fell by 98.71% to RM13.01 million from RM1.01 billion, as average selling prices (ASPs) and demand continue to come off the highs of a year ago when the Covid-19 pandemic was at or near its peak.

Earnings per share dropped significantly to 0.49 sen from 38.83 sen. Still, the group declared a single-tier interim dividend of three sen per share, to be paid on June 28.

In a Bursa Malaysia filing on Wednesday (May 25), the glove manufacturer said its quarterly revenue tumbled by 78.95% to RM407.80 million compared with RM1.94 billion as sales continue to be adversely impacted because the Withhold Release Order (WRO) imposed by the US Customs and Border Protection (USCBP) and the Canadian government had led to suspended orders and deliveries by Supermax.

For the full nine months, net profit declined by 75.5% to RM699.37 million from RM2.85 billion in the same period last year.

Revenue fell by 54.87% to RM2.39 billion from RM5.29 billion.

On a quarterly basis, net profit decreased by 72.81% from RM47.84 million registered in the immediate preceding quarter (2QFY22) while revenue slid 22.11% from RM523.54 million.

Moving forward, the group expects to see a continued normalising in the rubber glove business as ASPs and demand continue to decline from the pandemic highs.

“The rubber glove industry is coming off a period of exponential growth on the back of the Covid-19 pandemic and is now entering a more challenging phase as the coronavirus becomes endemic.

“ASP for gloves has been on the decline and demand is also on a downturn.

“Many of the large buyers seen at the height of the pandemic, such as the governments and large hospital chains are full or near full in terms of their PPE stocks after a period of aggressive sourcing and buying. Buying activities have moderated in tandem with reduced consumption levels,” the group revealed.

Supermax said that it officially started the ground-breaking of the US plant in May this year as part of its effort to address concerns on the vulnerability of disruption of PPE supply chains or over dependence on imports.

Shares of Supermax closed unchanged at RM1.03, giving it a market capitalization of RM2.8 billion.