KUALA LUMPUR (Aug 28): Supermax Corp Bhd (KL:SUPERMX) suffered its largest quarterly net loss of RM127.93 million for its fourth quarter ended June 30, 2024 (4QFY2024), hit by a write down of high price inventory at an overseas subsidiary amounting to RM72.85 million.

In addition, there was a RM27.1 million impairment of plant and machinery, factory equipment, and mould and tools at an old plant which stopped production during the quarter, as well as an additional tax charged at certain manufacturing units for prior years totalling RM30.8 million, according to the glove maker's bourse filing on Wednesday.

The group’s earnings was also affected by unrealised foreign exchange losses for the quarter amounting to RM9.9 million, provision for old and obsolete stock of packaging materials and certain downgraded glove inventory at old plants amounting to RM3.3 million, and pre-operating expenses of its new US plant amounting to RM421,223.

In comparison, Supermax reported a net profit of RM1.41 million for 4FY2023.

Quarterly revenue fell 19.3% year-on-year to RM179.64 million from RM222.6 million, due to low selling prices and because the market is still recovering from the demand and supply imbalance due to an oversupply of gloves in the past.

“The group continues to execute low-price contracts for two years at certain distribution and manufacturing units from the first quarter in 2023 to the fourth quarter in 2024.

“Although the global demand for gloves is gradually picking up, the global selling prices are still suppressed and have not fully recovered,” it added.

Supermax did not declare any dividend for 4QFY2024.

For the full year, Supermax sank into the red with a net loss of RM175.03 million, compared to a net loss of RM140.86 million in FY2023, as revenue contracted 21.3% to RM646.17 million from RM821.09 million.

Looking ahead, Supermax said the rubber glove market is experiencing a mild recovery as 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. The uptick in demand was due to customers replenishing their stock as those purchased during the pandemic are expiring or have expired.

“With demand on an uptrend, prices are also set to rise but have yet to normalise,” the group said.

It added that glove players in Malaysia have been consolidating their manufacturing operations to balance against the weak demand and rising costs.

"Moreover, China's glove manufacturers continue to sell at low prices for the sake of garnering global market share, which they have successfully achieved with their low pricing.

"With the impending tariff hike to be imposed on various Chinese imported products by the US government, Chinese manufacturers, including glove manufacturers, are intensifying to shift their manufacturing operations to Southeast Asia, to avoid the high tariffs,” it added.

For Supermax, orders from customers are gradually increasing but still at low market prices.

In line with the impending recovery in demand, the group said it is gradually ramping up production capacity and the plan to build six new modern and more efficient manufacturing blocks is still in place, with production lines being installed gradually at a pace that takes into account the current and expected market conditions.

Shares of Supermax closed three sen or 3.5% lower at 82 sen on Wednesday, giving the group a market capitalisation of RM2.23 billion.