Update Supermax 3Q net profit shrinks 22.3% to RM27.81mil due to foreign exchange losses

by **Cals** Sun 09 Nov 2014, 23:33

Update
Supermax 3Q net profit shrinks 22.3% to RM27.81mil due to foreign exchange losses

KUALA LUMPUR (Nov 7): Supermax Corporation Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) saw its net profit falling 22.34% to RM27.81 million for the third quarter ended Sept 30, 2014 (3QFY14), from RM35.81 million a year ago, due to foreign exchange losses.
The group said it suffered a loss of RM 5.9 million from foreign exchange in the quarter under review.
Quarterly revenue declined marginally by 2.17% to RM278.38 million, from RM284.56 million. The company attributed this to the lower sales of their gloves products.
Earnings per share dropped to 4.09 sen, from 5.26 sen last year.
In the nine months through Sept 30, 2014 (9MFY14), Supermax's net profit weakened to RM81.17 million — a 21.7% drop from RM103.69 million previosly; while revenue fell almost 20% to RM748.76 million, from RM935.11 million.
In a filing with Bursa Malaysia, Supermax said the downtrend in natural rubber latex prices continued into the third quarter, where prices averaged RM4.25 per kg wet for the quarter, compared to RM4.65 in preceding quarter.
"The contributing factors continue to be the ample supply of rubber in the market, as well as rising concerns over slower economic growth in China," it said.
Supermax also foresees latex material to remain at depressed levels, going forward.
"In terms of synthetic nitrile latex material, the prices of this raw material have remained generally stable in recent quarters. Nevertheless, we expect some downward bias, going forward," it added.
Despite this, Supermax said the global demand for gloves remains robust, as it expects stronger double digit growth from the emerging markets such as the Middle East and Africa.
"The on-going Ebola scare in Africa, which has since broken out of the continent with a few cases reported in the US and then Spain, has certainly further raised awareness about the importance of gloves in infection control," Supermax said.
Commenting on its manufacturing lines, Supermax said it would continue to improve productivity and manufacturing efficiency, and remain at the forefront in terms of global competitiveness.
"In addition, all the new manufacturing facilities would be fully automated and equipped, with manufacturing automation processes fully built-in as part of the capital expenditure," it said.
Despite the average selling prices (ASPs) having trended lower for most of this year in tandem with falling raw material prices, Supermax said it is maintaining its manufacturing margins of Nitrile Glove at between 9% and 11%, to be in line with global market prices, especially Nitrile gloves from China & Thailand.
"This is in line with our objective to be globally competitive," it added.
Supermax share price closed unchanged at RM2.33, giving it a market capitalization of RM1.58 billion.