Kossan expects ASP to decline on easing demand for gloves


KOSSAN Rubber Industries Bhd expects demand and average selling price (ASP) for gloves to ease as the number of Covid-19 cases categorised as severe decline.

For its second quarter ended June 30, 2021 (2Q21), the rubber glovemaker posted RM1.06 billion in net profit or earnings per share (EPS) of 41.72 sen against a net profit of RM131.06 million and EPS of 5.12 sen a year ago.

The sharp jump in profitability was on the back of higher pricing power and sales of gloves in the period, the company noted in its filing yesterday.

Revenue rose to RM2.24 billion from RM701.68 million in 2Q20, attributed to an increase in its gloves division’s contribution.

Kossan declared a 12 sen dividend a share for the 2Q21, which takes its first six-month dividend to 24 sen a share.

With the ongoing vaccinations and higher vaccination rates, the company noted infection cases should ease up gradually and affect demand for gloves and ASPs, while expecting satisfactory results for the remaining quarters of 2021.

“Post-pandemic, 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,” it noted in its filing.

Kossan expects its technical rubber products (TRP) division to remain profitable for the year driven by the gradual uptick in economic activity and infrastructure spending domestically and regionally.

“With the strong long-term relationships with our customers and higher demand for the group’s products in the gloves and clean-room division, coupled with a stable TRP division, the management is confident that 2021 will be an exceptional year for the group.”

On a year-to-date period, Kossan’s net profit amounted to RM2.11 billion or EPS of 82.54 sen compared to RM195.86 million or an EPS of 7.66 sen in the first half of 2020 (1H20), while revenue stood at RM4.43 billion in 1H21 versus RM1.31 million a year ago.