By SHAHEERA AZNAM SHAH / Pic By RAZAK GHAZALI
KOSSAN Rubber Industries Bhd’s earnings for its first quarter ended March 31, 2021 (1Q21), soared 16-fold to RM1.04 billion against RM64.8 million made in 1Q20, mainly attributed to the surging demand for gloves and pricing power amid the Covid-19 pandemic.
Turnover for the quarter surged almost four times to RM2.19 billion from RM611.47 million, thus raising earnings per share to 40.76 sen for the period.
Revenue for its glove division rose to RM2.09 billion in 1Q21, up 281.75% year-on- year (YoY) from RM548.25 million in 1Q20, while its profit before tax (PBT) rose 1,656.33% to RM1.36 billion from RM77.13 million in 1Q20.
“The strong performance by the gloves division, which contributes 95% and 98% of the group’s revenue and PBT respectively in 1Q21, was mainly attributable to the higher average selling price (ASP),” the glovemaker noted in a filing to Bursa Malaysia yesterday.
Kossan declared a first interim dividend of 12 sen per share to be paid on May 20, 2021.
Kossan’s technical rubber products (TRPs) division’s revenue amounted to RM41.54 million for the quarter, increasing 8.21% YoY compared to RM38.4 million made in 1Q20.
Its PBT rose 158.75% YoY to RM8.94 million in 1Q21, mainly attributable to higher deliveries and sales of higher-margin products.
Kossan’s cleanroom division recorded revenue and PBT of RM56.33 million and RM11.5 million respectively for the quarter compared to RM24.53 million and RM1.84 million in 1Q20.
Moving forward, Kossan expects its gloves division to continue performing significantly this year compared to 2020, as the strong demand for gloves continues to persist due to the increased healthcare standards.
“Post-pandemic, the demand for gloves will continue to undergo structural growth as a result of increased healthcare standards and hygiene awareness in both the medical and non-medical sectors.
“Even though the ASPs are projected to moderate as the demand-supply imbalance eases, demand will remain above pre-pandemic levels,” it said.
The group anticipates a gradual uptick in economic activity and infrastructure spending domestically and regionally will continue to bode well for the infrastructure and automotive segment, which will benefit Kossan’s TRP division.
“With the strong long-term relationships with our customers and robust demand for the group’s products in the gloves and cleanroom division, coupled with a stable TRP division, we are confident FY21 will be an exceptional year for the group,” it said.
Shares of the glovemaker declined by four sen or 1.04% to RM3.80 yesterday, valuing the company at RM9.72 billion.