KUALA LUMPUR, May 25 — Supermax Corporation Bhd’s net profit took a dive to RM13.01 million in the third quarter (Q3) ending March 31, 2022, from RM1.01 billion a year earlier as sales continued to be adversely impacted by the withhold release order (WRO) imposed by the United States coupled with the downtrend in selling prices and demand.

Group revenue fell by 79 per cent, or RM1.53 billion, to RM407.80 million from the previous year’s corresponding quarter, the glove maker said in a filing with Bursa Malaysia today.

"Over this period, profitability in absolute terms and in terms of margins fell away significantly due to a combination of factors,” the company said.

The factors included the WRO imposed by the US Customs and Border Protection in October 2021 and the Canadian government having suspended orders and deliveries from Supermax.

In addition, average selling prices (ASPs) and demand continued to come off the highs recorded a year earlier at a time when the worldwide COVID-19 pandemic fears were at or near its peak.

"There has been continued decline in ASPs amid intensifying competition with overall glove supply rising significantly in line with the ramping up of production capacities by existing and new glove players,” it said.

Nevertheless, Supermax said the structural shift triggered by the pandemic would see demand remain at a higher level compared to the pre-pandemic period and resume a longer-term upward trend once a period of consolidation was over.

On logistics, the company said that not only had the cost risen significantly, the task of securing sufficient shipping containers in a timely manner for glove exporting had also become a difficult challenge.

For the cumulative nine-month financial period, net profit shrank by three-quarters to RM699.37 million from RM2.85 billion in the previous year’s corresponding period, while revenue declined to RM2.39 billion from RM5.29 billion.

Expansion in Malaysia, to the US

On its capacity expansion, Supermax said it was currently building five glove manufacturing plants concurrently and they were scheduled for completion progressively.

"The new plants will add 22.25 billion new capacity, bringing the group’s total capacity to 48.42 billion gloves when they are fully commissioned,” it said, adding that the group would invest total capital expenditure of RM1.39 billion for these plants.

Starting from this month, the group has also embarked on the rebuilding of old plants as the new plants are ready for commissioning in stages. The progress of commissioning of the new plants would depend on the availability of workers and the prevailing market conditions, it said.

To address the issue of supply chain disruption, Supermax said it was expanding to the United States.

"On May16, 2022, various permits to start the site clearing, earth works and works below ground have been obtained. We have on May 18, 2022, officially started the ground-breaking of the US plant,” it said.

-- BERNAMA

TAGS: Supermax Corp, Results, Q3 FY2022, WRO, Expansion, Rubber gloves