Supermax counts on new income stream

Firm to sell medical disposal products made by other parties
By YVONNE TAN

yvonne@thestar.com.my
KUALA LUMPUR: Glove maker Supermax Corp Bhd is banking on a new income stream derived from global sales and marketing network to mitigate any effects of higher production cost.

Executive chairman and group managing director Datuk Seri Stanley Thai said the company would “aggressively globalise” its operations via its net work of about 700 distributors worldwide.

“We will sell and distribute medical disposal products t hat we do not manufacture such as surgical masks via these dist ributors.

»The new stream of income is expected to contribute 5% to our net profit this year« DATUK SERI STANLEY THAI

 

“The new stream of income is expected to contribute 5% to our net profit this year,” Thai said after a media and analyst briefing on the company's prospects here yesterday.

At the briefing earlier, Thai said Supermax expected latex pri ces to drop to RM7.50 per kg th is year from RM10.60 now.

Supermax recently reported a 24.8% drop in its fourth-quarter net profit to RM32.7mil from RM43.5mil in the same quarter a year earlier largely on continuous high latex prices.

“Natural rubber latex prices are over-speculated and we expect to see a sharp fall in the second quarter of this year,” Thai said.

The price of the raw material has increased more than 70% in the past one year. Thai said 70% of Supermax's production lines were int er-switchable for natural late x and nitrile gloves.

“This year, nitrile powder-free gloves will make up 40% to 45% of our total glov es sold compa red with 30 % previously,” he said.

Supermax has an installed capacity of 17.6 bi llion pieces per annum. This year, the company plans to increase its product ion capacity by 4.1 billion to 21.7 billion pieces, according to a note by Kenanga Research.

Thai said selling prices, which were denominated in the greenback, were adjusted frequently to mitigate the impact of weak US dollar.

In notes to clients yesterday, analysts said Supermax's fourth-quarter results were largely within expectations.
“We expect a challenging year ahead for rubber glove makers, given the all-time high latex prices.

“Nevertheless, the demand for powder-free medical gloves is still going strong; moreover, distributors in the United States have been buying less and keeping their inventory levels at the lowest possible in the past few months; hence we believe buying will continue once they run out of stock,” Kenanga said.

The United States is Supermax's largest market, contributing 40% to its sales.