KUALA LUMPUR (May 28): Supermax Corp Bhd (KL:SUPERMX) posted its sixth straight quarterly loss on Tuesday, but the loss for its third quarter ended March 31, 2024 (3QFY2024) was smaller than a year earlier thanks to improved profit margins.

The glove manufacturer attributed the better profit margins to efficient cost management that included focusing on more efficient production lines and shutting down old and non-efficient ones.

The profit margin of 0.1% versus a net loss margin of 24.9% in 3QFY2023 was also achieved on the back of higher realised foreign exchange gain and lower unrealised foreign exchange loss as well as one-off adjustments to depreciation, the group said in its exchange filing.

The net loss for 3QFY2024 was RM686,000, compared with a net loss of RM39.92 million a year ago. Loss per share narrowed to 0.03 sen from 1.51 sen.

Quarterly revenue dropped 18.63% to RM143.01 million from RM175.74 million in 3QFY2023, which the group said was due to weak glove demand as customers had overstocked during the pandemic.

Supermax did not declare any dividends for the quarter.

Noting an uptick in glove demand as customers replenished their stock, Supermax said prices are expected to rise "but have yet to normalise".

It said: “The rubber glove market is experiencing a mild recovery as the demand for medical and surgical rubber gloves picked up in March despite the prevailing oversupply situation which is expected to be in equilibrium by 2025.”

"For the Supermax Group itself at the present time, the orders from customers are gradually increasing but at low market prices,” the group added.

For the first nine months of FY2024, net profit narrowed to RM47.1 million compared with RM142.28 million a year earlier, while revenue fell 22.05% to RM466.53 million from RM598.49 million.

Recovery remains subdued throughout the year

Supermax said that the group does not anticipate a significant improvement in its performance due to the high volume of high-priced stocks at its overseas distribution centres.

While the group continues to practise cost rationalisation to improve its profitability, it stressed that higher material and utility costs are expected to continue squeezing its margins.

In the manufacturing division, the group's plan to build six modern and more efficient manufacturing blocks is still in place, with production lines being installed gradually.

“The development of Supermax’s first overseas manufacturing operations is currently well underway in the USA. The US venture is to put Supermax in a good position to address increasing import barriers and tariffs being put in place that will impact countries that export their goods into the US market,” it said.

Moving forward, Supermax expects to be in a strong position when the glove market regains its vibrancy in 2025, supported by its production capacity as the group is investing in automation technology which is expected to minimise costs and reduce reliance on foreign workers, it added.

Shares of Supermax finished half a sen, or 0.54%, lower to 92 sen on Tuesday, giving the group a market capitalisation of RM2.50 billion.