Rubberex 1Q net profit tumbles 97% y-o-y amid easing of selling prices, low capacity utilisation

KUALA LUMPUR (May 31): Rubberex Corp (M) Bhd reported a 97% slump in its net profit for the first quarter ended March 31, 2022 (1QFY22) to RM2.55 million from RM86.57 million in the same quarter last year due to continuous easing of average selling prices (ASPs) and low capacity utilisation on the back of an oversupply of nitrile disposable gloves in the market.

Rubberex projected further softening of glove ASPs, especially in the nitrile disposable glove division, to persist in 2022. Further consolidation of the industry is also expected in the current year with the slowdown in demand of products from the healthcare sector, it cautioned.

The glove maker’s quarterly revenue tumbled 70% to RM52.58 million from RM175.24 million, Rubberex’s filing with Bursa Malaysia on Tuesday (May 31) showed. Earnings per share dropped to 0.29 sen from 10.44 sen in the previous year.

Compared to the immediate preceding quarter, Rubbrex’s net profit shrank 72.1% from RM9.15 million in 4QFY21 while revenue declined 18.15% from RM64.24 million. The lower earnings were due to the persistent easing of ASPs for nitrile disposable gloves as well as slower order uptakes. However, this was mitigated by the resilience and stability of the group’s other products, specifically in the household and industrial gloves division.

“ASPs are also dampened by the additional glove capacity coming on-stream from existing and new players. However, the management expects the group’s capacity utilisation to gradually improve towards the second half of the year.

“Meanwhile, demand for the group’s general-purpose and industrial gloves is expected to remain stable in the current year. With the group’s workforce fully vaccinated and approximately 89% further boosted, the management expects sporadic Covid-19 cases and production interruptions to be minimised in the current year,” it said.

Rubberex added the group is also mindful of competition and operational risks such as foreign exchange fluctuations, material and labour costs that could impact its financial results.

“Nevertheless, barring any significant adverse effects of the ongoing pandemic, the group is still expected to remain profitable for financial year 2022,” it added.

The glove maker said it remains focused on its nitrile disposable glove division where glove orders and supply are expected to stabilise in the long run amidst heightened safety and hygiene awareness among the global population post-pandemic.

At the closing bell on Tuesday, Rubberex shares were up 2.5 sen or 4.7% to 62.5 sen, with some 3.33 million shares changing hands.

Based on its closing price, the company is valued at RM572.19 million. The counter has fallen 43.18% over the past year from RM1.10.