KUALA LUMPUR (Aug 28): Supermax Corp Bhd suffered its highest quarterly net loss of RM127.93 million in the fourth quarter ended June 30, 2024 (4QFY2024), due to a write-down of high-priced inventory of an overseas subsidiary of RM72.85 million.
In addition, there was an impairment of RM27.1 million on plant and machinery, factory equipment and moulds and tools at an old plant that ceased production during the quarter, as well as an additional tax charge on certain production units for previous years totalling RM30.8 million, according to the glove maker’s stock exchange announcement on Wednesday.
The Group’s result was also impacted by unrealised foreign exchange losses for the quarter of RM9.9 million, provisions for old and obsolete inventories of packaging materials and certain downgraded glove inventories in old factories of RM3.3 million and start-up costs for the new US factory of RM421,223.
In comparison, Supermax reported a net profit of RM1.41 million for the fourth fiscal year 2023.
Quarterly sales decreased by 19.3% year-on-year from RM222.6 million to RM179.64 million due to low selling prices and the fact that the market is still recovering from the supply-demand imbalance caused by an oversupply of gloves in the past.
“The Group continues to implement two-year low-price contracts with certain sales and production units from the first quarter of 2023 to the fourth quarter of 2024.
“Although global demand for gloves is gradually picking up, global selling prices are still low and have not yet fully recovered,” it said.
Supermax has not announced a dividend for the fourth quarter of fiscal 2024.
For the full year, Supermax slipped into the red with a net loss of RM175.03 million, compared to a net loss of RM140.86 million in FY2023, as revenue declined 21.3% to RM646.17 million from RM821.09 million.
Looking ahead, Supermax said the rubber gloves market is witnessing a slight recovery as demand for medical and surgical rubber gloves picked up in March, despite the prevailing oversupply situation, which is expected to settle by 2025. The increase in demand was due to customers replenishing their inventories as products purchased during the pandemic are expiring or have expired.
“As demand is on the rise, prices will also rise, but they have not yet returned to normal,” the group said.
It added that glove manufacturers in Malaysia had consolidated their production activities to counter weak demand and rising costs.
“In addition, China’s glove manufacturers continue to sell their products at low prices in order to gain market share worldwide, which they have succeeded in doing with their low prices.
“In view of the impending tariff increases that the US government will impose on various Chinese imported products, Chinese manufacturers, including glove manufacturers, are increasingly relocating their production facilities to Southeast Asia to avoid the high tariffs,” it added.
At Supermax, customer orders are gradually increasing, although still at low market prices.
In line with the impending recovery in demand, the Group says it is gradually increasing its production capacity. The plan to build six new, modern and more efficient production blocks remains in place. The production lines will be installed gradually and at a pace that takes into account current and expected market conditions.
Supermax shares closed three sen or 3.5% lower at 82 sen on Wednesday, giving the group a market capitalisation of RM2.23 billion.
