Supermax Revenue Plunges 79% Impacted By WRO And Lower ASPs

Supermax Group’s revenue fell by 78.9% (RM1.53 billion) to RM 407.8 million compared to the corresponding quarter a year ago resulting in profitability have also fallen away significantly. Profit before tax drops massively from RM1.3 billion to RM18 million

  • The group added that the massive drop in revenue was a result of multiple factors including, the average selling prices (ASPs) and demand continuing to come off the highs recorded a year ago, overall sales continue to be adversely impacted as the Withhold Release Order (WRO) imposed by the US Customs and Border Protection and the Canadian government are still in place. During the period, Supermax had also implemented a higher minimum wage of RM1,400 above the statutory rate of RM1,200 in February 2022 (before increasing the rate further in May 2022 in line with the Government’s move to increase the minimum wage to RM1,500).
  • Compared to the preceding quarter, the Group’s revenue was lower by 22.1%. The Group’s profits recorded even sharper declines with EBITDA, PBT and PAT falling by 68.9%, 80.1%, and 72.1% respectively.
  • In its notes to Bursa, the group said the rubber glove industry is coming off a period of exponential growth on the back of the Covid-19 pandemic and is now entering a more challenging phase as the coronavirus becomes endemic. Average selling prices for gloves have been on the decline and demand is also on a downturn. Concerns over the Covid-19 pandemic continue to ease as more and more measures to manage the Covid-19 pandemic such as the vaccination programs are rolled out by governments around the world. Many of the large buyers seen at the height of the pandemic, such as the governments and large hospital chains are full or near full in terms of their PPE stocks after a period of aggressive sourcing and buying. Buying activities have been moderated in tandem with reduced consumption levels.

On the outlook, Supermax expects to see a continued normalising in the rubber glove business as ASPs and demand continue to decline from the highs seen at the peak of the Covid-19 pandemic. Nevertheless, the structural shift triggered by the pandemic will 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 is over

To address this major concern in countries where Supermax operates, in addition to the capital expenditure that the Group is putting into Glove Manufacturing in Malaysia, it is reinvesting the earnings derived from Distribution Centres into the respective countries where Supermax operates.

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