KUALA LUMPUR: Supermax Corp Bhd’s 3QFY11 net profit fell 19% from a year earlier despite its sales picking up, as the rubber glove manufacturer contended with costlier raw materials and a stronger ringgit.
In a statement to the exchange yesterday, Supermax said its net profit for 3QFY11 came to RM30.9 million or 9.09 sen a share compared with RM38.14 million or 11.24 sen a share in 3QFY10.
Revenue for the period in review rose 15% to RM271.42 million from RM235.1 million a year ago, as the company produced and sold more gloves.
Supermax said its top line benefited from higher glove output from new and existing production lines.
“Having weathered the sharp volatility in latex prices and foreign exchange rate fluctuations over the past one to 1½ years, the Supermax group has turned the corner and returned to the path of profitability growth after recording a second consecutive quarter of core profit growth.
“While the industry had remained largely resilient, many industry players had seen their margins being squeezed as latex prices soared and the US dollar/ringgit exchange rate fell almost continuously during this period,” Supermax said in the notes accompanying its financial results.
Supermax plans to reward shareholders with a three sen a share tax-exempt dividend for the quarter. The first interim payout translates into a 6% yield against the stock’s par value of 50 sen. Cumulative nine-month net profit, meanwhile, declined 43% to RM77.88 million from RM135.47 million a year earlier although revenue was up 9% to RM750.71 million from RM690.58 million for the nine months of 2010.
Against the current operating environment, Supermax said it expects a full-year net profit of between RM100 million and RM120 million, based on the company’s targeted 15% to 20% net profit growth for FY11 ending Dec 31.
During 3Q, average natural rubber prices rose 23% to RM8.63 a kg from a year earlier, while prices of synthetic rubber or nitrile climbed 42% to RM6.43, according to Supermax. The ringgit strengthened from 3.16 against the US dollar to 3.02 during the same period, the company said.
“Supermax group has been actively adjusting selling prices to mitigate the impact of highly volatile raw material prices as well as unfavourable foreign exchange rates.
“While we are increasing production of nitrile gloves, we have been maintaining our manufacturing margins at 11% to 15% to be in line with global prices, especially gloves from China. This is in line with our objective to be globally competitive,” Supermax said.
Capacity expansion is on the cards. Supermax said it plans to grow its surgical glove capacity tenfold, with the new lines expected to be ready by year-end. The additional capacity will enable Supermax to capitalise on the lucrative surgical glove market.
According to the company, the expansion will be undertaken in one of its rebuilt plants and is expected to contribute US$10.1 million (RM31.6 million) in additional profit to the group next year. Supermax also indicated plans to increase its natural rubber and nitrile glove output. This involves two new factories in Klang over the next two years, apart from improvements to existing lines.
Supermax closed at RM3.22 yesterday, slipping three sen. Its latest reported net assets per share was RM2.21.
This article appeared in The Edge Financial Daily, October 25, 2011.
In a statement to the exchange yesterday, Supermax said its net profit for 3QFY11 came to RM30.9 million or 9.09 sen a share compared with RM38.14 million or 11.24 sen a share in 3QFY10.
Revenue for the period in review rose 15% to RM271.42 million from RM235.1 million a year ago, as the company produced and sold more gloves.
Supermax said its top line benefited from higher glove output from new and existing production lines.
“Having weathered the sharp volatility in latex prices and foreign exchange rate fluctuations over the past one to 1½ years, the Supermax group has turned the corner and returned to the path of profitability growth after recording a second consecutive quarter of core profit growth.
“While the industry had remained largely resilient, many industry players had seen their margins being squeezed as latex prices soared and the US dollar/ringgit exchange rate fell almost continuously during this period,” Supermax said in the notes accompanying its financial results.
Supermax plans to reward shareholders with a three sen a share tax-exempt dividend for the quarter. The first interim payout translates into a 6% yield against the stock’s par value of 50 sen. Cumulative nine-month net profit, meanwhile, declined 43% to RM77.88 million from RM135.47 million a year earlier although revenue was up 9% to RM750.71 million from RM690.58 million for the nine months of 2010.
Against the current operating environment, Supermax said it expects a full-year net profit of between RM100 million and RM120 million, based on the company’s targeted 15% to 20% net profit growth for FY11 ending Dec 31.
During 3Q, average natural rubber prices rose 23% to RM8.63 a kg from a year earlier, while prices of synthetic rubber or nitrile climbed 42% to RM6.43, according to Supermax. The ringgit strengthened from 3.16 against the US dollar to 3.02 during the same period, the company said.
“Supermax group has been actively adjusting selling prices to mitigate the impact of highly volatile raw material prices as well as unfavourable foreign exchange rates.
“While we are increasing production of nitrile gloves, we have been maintaining our manufacturing margins at 11% to 15% to be in line with global prices, especially gloves from China. This is in line with our objective to be globally competitive,” Supermax said.
Capacity expansion is on the cards. Supermax said it plans to grow its surgical glove capacity tenfold, with the new lines expected to be ready by year-end. The additional capacity will enable Supermax to capitalise on the lucrative surgical glove market.
According to the company, the expansion will be undertaken in one of its rebuilt plants and is expected to contribute US$10.1 million (RM31.6 million) in additional profit to the group next year. Supermax also indicated plans to increase its natural rubber and nitrile glove output. This involves two new factories in Klang over the next two years, apart from improvements to existing lines.
Supermax closed at RM3.22 yesterday, slipping three sen. Its latest reported net assets per share was RM2.21.
This article appeared in The Edge Financial Daily, October 25, 2011.
