FRIDAY, NOVEMBER 17 KUALA LUMPUR- Release of Malaysia's 3rd Quarter 2017 GDP at 1200 (0400 GMT) KUALA LUMPUR- Prime Minister Najib Tun Razak launches publications by Global Movement of Moderates Foundation (GMMF) and its webpage at Multipurpose Hall, Level 3, Prime Minister's Office at 1715 (0915 GMT) ?
PETALING JAYA: The weak US dollar is already starting to take a bite out of the bottom line of exporters.
Topping the list are glove and furniture manufacturers that have had a good run for the whole of last year, thanks to strong demand in the US and weak ringgit. However, since September last year, the ringgit has strengthened, impacting earnings potential.
Furniture manufacturers that have seen their share price on a downtrend since November last year are poised to report a weaker set of earnings amidst the weakening US dollar.
The furniture manufacturers sell their products in US dollars, which has weakened by almost 9% since September last year.
An industry official said the weak US dollar would certainly have a negative impact on the earnings of furniture companies until they were able to renegotiate the price with buyers.
“Every month, manufacturers have been taking the hit from the weak US dollar. Manufacturers can only start to renegotiate the selling price when the movement is more than 10% for a certain period,” the official said.
“Manufacturers had largely expected the ringgit to average at RM4 to the US dollar. But now it looks like the dollar will fall even more than that,” said a baker.
Apart from the weak US dollar, rising cost of production has also hit the operations of the furniture manufacturers. Wages have gone up not only in Malaysia but also in Thailand and Vietnam.
The stock prices of furniture manufacturers have been on a downtrend since October last year on the back of the weakening US dollar. Among the companies affected are Latitude Tree Bhd, Lii Hen Industries Bhd
, Poh Huat Resources Holdings Bhd, Homeritz Corp and SHH Resources Bhd.
As for glove manufacturers, research houses have already started to make "sell" calls on the sector.
Like furniture manufacturers, the glove producers also sell their products in US dollar terms. The weak US dollar would translate to less ringgit for the manufacturers.
There is also already a sell call on Hartalega Holdings Bhd, the most expensive of the glove manufacturers, as of two weeks ago.
In the latest development, UOB Kay Hian has called for investors to take profit on the rubber glove sector and downgraded the sector.
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