PETALING JAYA: Kossan Rubber Industries Bhd’s net profit for the fourth quarter ended Dec 31, 2021 fell 59.76% to RM218.67 million from RM543.42 million a year ago in tandem with the decrease in revenue from its glove, technical rubber products (TRP) and clean room divisions.
The group’s revenue decreased by 29.26% to RM924.56 million as compared with RM1.31 billion in Q4’20 due to lower revenue from all three divisions.
For FY21, its net profit more than doubled to RM2.85 billion as compared with RM1.09 billion in FY2020 mainly due to the higher average selling price (ASP) in the gloves division.
The group recorded revenue of RM6.66 billion, an increase of 82.97% as compared with RM3.64 billion in FY2020 due to higher revenue from all three divisions.
It declared a fourth interim dividend of 12 sen, bringing its total dividend for FY21 to 48 sen.
In the near term, Kossan said the glove industry remains challenging with the supply and demand imbalance persisting. The group expects the continued tapering of glove demand and ASP from the heights of the pandemic as a result of the rollout of mass vaccinations globally. Even with the Omicron variant, the percentage of Covid-19 cases categorised as severe has declined compared to the earlier stages of the pandemic.
“As such, the exceptionally high ASPs which were due to the shortage and panic-buying of gloves during the onset of the pandemic have decreased rapidly leading to inventory adjustments and delayed orders from customers. The glove sector is seeing increased competition and incoming capacity from domestic as well as foreign manufacturers. In addition, the global logistics disruptions and container shipping shortages have continued to affect glove shipments and deliveries. Based on these reasons, the glove sector is expected to face headwinds in the current year 2022.”
For the TRP division, it said the anticipated gradual uptick in economic activity and infrastructure spending domestically and regionally will continue to spur the infrastructure and automotive segments, and the group expects this division to remain profitable in 2022.
“As we move forward, the group will continue with its transformation where structural changes have been implemented throughout the organisation, with a focus on operating efficiency which will allow the group to be resilient even in the face of rising costs and heightened competition. The group has accelerated reinvestments into digitalisation and automation of its plants to increase productivity and to prepare the group for its next phase of growth. Post pandemic, the glove industry will continue to experience stable growth underpinned by higher healthcare standards and hygiene awareness in both the medical and non-medical sectors. The group remains committed to its future growth and is optimistic of the long-term prospects of the glove industry,“ Kossan said.