Kossan’s 2Q net profit grows 37% on higher sales volume

by **Cals** Thu 20 Aug 2015, 20:35

Kossan’s 2Q net profit grows 37% on higher sales volume

KUALA LUMPUR (Aug 20): Kossan Rubber Industries Bhd ([You must be registered and logged in to see this image.] Financial Dashboard), whose share price is hovering near the record high level, announced its net profit grew 37% to RM47.44 million for the second quarter ended June 30, 2015 (2QFY15), from RM34.59 million in the previous corresponding quarter, driven by the same quantum increase in its sale quantity in the quarter under review.
The rubber glove maker’s earnings per share (EPS) increased to 7.42 sen, from 5.41 sen.
Other than higher glove sales, Kossan told Bursa Malaysia that better product mix and improved operational efficiency also helped to boost its profitability.
The group’s quarterly revenue expanded nearly 27% to RM385.78 million in 2QFY15, from RM303.83 million a year ago.
For the first six months ended June 30, Kossan’s net profit increased 30% to RM92.89 million, from RM71.43 million last year; while its revenue grew almost 24% to RM755.04 million, from RM610 million.
In its explanatory note, Kossan said its prospect of the remaining quarters of FY15 remains strong, as its newly-commissioned plant 2 and 3 are in full operation since June, and the new plants are expected to contribute significantly from July onwards.
“The new capacity of nitrile glove from the two plants has been taken up fully by customers as of to-date, and this will underpin the strong earnings growth for the 2HFY15,” it said.
Currently, Kosssan is producing 22 billion pieces of gloves per annum, of which 68% are nitrile gloves, and 32% of natural rubber gloves.
With all its plants operating in almost full capacity, the group expects the product mix to be 69% of nitrile gloves, against 31% of natural rubber gloves.
“The management will continue to be vigilant over the overhead cost and adopt various measures to reduce the overhead cost further, to ensure better profitability and [at the] same time, actively exploring into international markets for higher value added technical products,” Kossan said.
Kossan's (fundamental: 2.1; valuation: 0.5) share price hit its record high of RM7.45 on July 29 this year, increasing 66% from RM4.48 since beginning of the year.
The counter closed at RM7.31 today, having gained six sen or 0.83%, for a market value of RM4.64 billion.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)