Kossan in the red in 1Q amid losses from gloves division

KUALA LUMPUR (April 27): Kossan Rubber Industries Bhd posted a net loss of RM24.25 million for the first quarter ended March 31, 2023 (1QFY2023), versus a net profit of RM90.1 million a year ago, mainly due to losses from its gloves division.

The glove manufacturer posted a loss per share of 0.95 sen versus earnings per share of 3.53 sen previously, according to its bourse filing.

Quarterly revenue declined 42.54% to RM394.71 million, from RM687.01 million in 1QFY2022, amid lower revenues at the gloves and clean-room divisions.

Kossan did not declare a dividend for the quarter.

On a quarter-on-quarter basis, the group’s net loss widened from RM2.49 million in 4QFY2022, while revenue dropped 18% from RM481.44 million.

Kossan expects its performance for FY2023 to be challenging as a result of the headwinds affecting the glove sector.

"The demand-supply imbalance continues to negatively impact the glove sector. The oversupply of gloves as a result of surplus installed capacity arising from the pandemic-driven surge in additional capacity as well as inventory destocking from customers have forced average selling prices (ASPs) to fall significantly from their peak coupled with some overseas competitors selling the gloves at lower price in order to capture the market.

"At the same time, the sector faces higher energy and labour costs. These headwinds are expected to persist throughout FY2023 and the group has placed its near-term expansion plans on hold in line with the prevailing market conditions," it added.

Kossan group expects its technical rubber products division to deliver a satisfactory performance for FY2023, on the back of the anticipated gradual uptick in economic activity and infrastructure spending globally, which will continue to spur the infrastructure and automotive segments.

Shares in Kossan ended two sen or 1.55% lower at RM1.27, giving the group a market capitalisation of RM3.25 billion.