PETALING JAYA: Rubber glove maker Supermax Corp Bhd is expecting to achieve between RM100 million and RM110 million in profit after tax (PAT) and sales of up to RM1 billion for the financial year ended Dec 31, 2011 (FY11).
Its executive chairman cum group managing director Datuk Seri Stanley Thai said FY11 profits would be lower compared to the preceding year due to headwinds such as high natural rubber prices, and volatile forex rates.
Supermax posted RM158.96 million in PAT from RM977.28 million revenue in FY10.
For the first nine months of FY11, it registered net profits of RM77.87 million on the back of RM750.71 million in revenue.
Nevertheless, Thai said Supermax is expected to see its sales grow between 20% and 30% for FY12 due to the strengthening US dollar and softening natural rubber prices.
“FY11 was a challenging year for the industry due to these headwinds. However, natural rubber prices have fallen from its high and is expected to soften to between RM5.50 and RM6 in the first quarter of 2012. This will result in stronger profit margins for natural rubber glove players,” Thai said after the company EGM yesterday.
Natural rubber prices had fallen from an all-time high of RM10.50 per kg in mid-February last year to RM6.50 per kg in December.
Thai said that the profit margins for nitrile gloves would soften further to between 11% and 13% in the second half of 2012. “We expect profit margins for natural rubber gloves to increase to similar levels (as nitrile gloves),” said Thai. Supermax’s product mix is currently 60% natural rubber gloves and 40% nitrile gloves.
Apart from softening natural rubber prices, Thai said FY12 earnings prospects would also be supported by capacity expansion efforts and higher contribution from its distribution arm. Yesterday, Supermax incorporated a wholly owned subsidiary in UK to market and distribute gloves in the region.
“The subsidiary would be focused on marketing (Supermax’s products) to the dental market in UK. In addition, our German subsidiary had also contributed positively to the group since its incorporation in 2010. We see huge growth in the hospital market there,” said Thai, adding that its distribution arm contributes about 40% to the group’s profits.
Supermax is also replacing its old lines and building two new plants to increase its capacity from 17.5 billion gloves per annum currently to 22 billion by the 2H13, at a cost of RM122 million.
While foreign exchange rates are expected to remain volatile this year, Thai said there would be minimal risks as long as exporters lock in the exchange rates on their exports.
On the recent re-emergence of the H1N1 bird flu in Hong Kong, Thai said there is little impact on Supermax at the moment.
“This (the impact or lack of it) is because the Chinese public hospitals use vinyl gloves rather than natural rubber gloves. Nonetheless, we expect demand for natural rubber gloves to increase once healthcare reforms take place in the country,” said Thai.
Natural rubber and nitrile gloves are considered safer and environmental-friendly compared to vinyl gloves.
Yesterday, Supermax’s shareholders approved a proposed one-for-one bonus issue of 340.08 million new shares and a proposed purchase by Supermax of up to 10% of its issued and paid-up share capital.
Thai said the bonus issue is intended to reward shareholders and improve the liquidity of Supermax shares.
Supermax was the top gainer on Bursa Malaysia yesterday, adding 39 sen to close at RM4.32 with 11.18 million shares done.
This article appeared in The Edge Financial Daily, January 12, 2012.
Its executive chairman cum group managing director Datuk Seri Stanley Thai said FY11 profits would be lower compared to the preceding year due to headwinds such as high natural rubber prices, and volatile forex rates.
Supermax posted RM158.96 million in PAT from RM977.28 million revenue in FY10.
For the first nine months of FY11, it registered net profits of RM77.87 million on the back of RM750.71 million in revenue.
Nevertheless, Thai said Supermax is expected to see its sales grow between 20% and 30% for FY12 due to the strengthening US dollar and softening natural rubber prices.
“FY11 was a challenging year for the industry due to these headwinds. However, natural rubber prices have fallen from its high and is expected to soften to between RM5.50 and RM6 in the first quarter of 2012. This will result in stronger profit margins for natural rubber glove players,” Thai said after the company EGM yesterday.
Natural rubber prices had fallen from an all-time high of RM10.50 per kg in mid-February last year to RM6.50 per kg in December.
Thai said that the profit margins for nitrile gloves would soften further to between 11% and 13% in the second half of 2012. “We expect profit margins for natural rubber gloves to increase to similar levels (as nitrile gloves),” said Thai. Supermax’s product mix is currently 60% natural rubber gloves and 40% nitrile gloves.
Apart from softening natural rubber prices, Thai said FY12 earnings prospects would also be supported by capacity expansion efforts and higher contribution from its distribution arm. Yesterday, Supermax incorporated a wholly owned subsidiary in UK to market and distribute gloves in the region.
“The subsidiary would be focused on marketing (Supermax’s products) to the dental market in UK. In addition, our German subsidiary had also contributed positively to the group since its incorporation in 2010. We see huge growth in the hospital market there,” said Thai, adding that its distribution arm contributes about 40% to the group’s profits.
Supermax is also replacing its old lines and building two new plants to increase its capacity from 17.5 billion gloves per annum currently to 22 billion by the 2H13, at a cost of RM122 million.
While foreign exchange rates are expected to remain volatile this year, Thai said there would be minimal risks as long as exporters lock in the exchange rates on their exports.
On the recent re-emergence of the H1N1 bird flu in Hong Kong, Thai said there is little impact on Supermax at the moment.
“This (the impact or lack of it) is because the Chinese public hospitals use vinyl gloves rather than natural rubber gloves. Nonetheless, we expect demand for natural rubber gloves to increase once healthcare reforms take place in the country,” said Thai.
Natural rubber and nitrile gloves are considered safer and environmental-friendly compared to vinyl gloves.
Yesterday, Supermax’s shareholders approved a proposed one-for-one bonus issue of 340.08 million new shares and a proposed purchase by Supermax of up to 10% of its issued and paid-up share capital.
Thai said the bonus issue is intended to reward shareholders and improve the liquidity of Supermax shares.
Supermax was the top gainer on Bursa Malaysia yesterday, adding 39 sen to close at RM4.32 with 11.18 million shares done.
This article appeared in The Edge Financial Daily, January 12, 2012.
