KUALA LUMPUR: Kossan Rubber Industries Bhd
expects the performance for the current financial year ending Dec 31, 2023 (FY23) to be challenging due to the headwinds affecting the glove sector.
“Beyond the near-term, global glove demand is expected to remain on a growth path as a result of a shift in glove usage due to higher healthcare standards and hygiene awareness in both the medical and non-medical sectors,” Kossan said in a filing with Bursa Malaysia.
Emerging economies with low per capita consumption will also drive glove demand in the long run, it said.
“The group remains committed to the glove industry and will continue to focus on effective cost management and specialised products that meet specific requirements while accelerating the transformation into digitalisation and automation across our operations to increase productivity and efficiency to lower the production cost,” the glovemaker said.
Kossan noted the demand-supply imbalance continued to negatively impact the glove sector.
The oversupply of gloves as a result of surplus installed capacity arising from the pandemic-driven surge in additional capacity as well as inventory destocking from customers have forced average selling prices (ASPs) to fall significantly from its peak coupled with some overseas competitors selling the gloves at lower price in order to capture the market.
“At the same time, the sector faces higher energy and labour costs. These headwinds are expected to persist throughout FY23 and the group has placed its near-term expansion plans on hold in line with the prevailing market conditions,” it said.
In the first quarter ended March 31, Kossan posted a net loss of RM24.25mil, or loss per share of 0.95 sen against a net profit of RM90.1mil, or earnings per share of 3.53 sen posted a year ago.
Revenue for the quarter tumbled 42.5% to RM394.7mil from RM687mil a year prior.
