KUALA LUMPUR: Supermax Corporation Bhd in announcing its second quarter financial year 2024 results said that China glove manufacturers are likely to have taken over global leadership in the rubber glove market, at the very least in  terms of pricing.

In its filing with Bursa Malaysia Securities Bhd, Supermax said average selling prices (ASPs) remain suppressed with manufacturers from China proving to be daunting competitors.

At the two most recent large international trade shows, the take-away was that the oversupply situation is expected to moderate gradually over an extended period as the industry goes through a consolidation stage.

Smaller players are expected to exit the market while while the bigger players are scaling back their expansion and retiring older factories and production lines bowing out.

Supermax said a meaningful recovery in demand-supply is likely to only take place sometime in 2025, as it reportednarrower losses in the second quarter ended Dec 31, 2023 of financial year 2024.

It reported a net loss for the second quarter of the financial year 2024 (2QFY24), narrowed to RM44.4 million from RM108.07 million in the corresponding period of the previous year.

This was largely due to lower forex losses and higher interest income.

Revenue however fell 16.7 per cent to RM145.6 million from RM174.8 million in the corresponding period last year.

For the six-month period of FY24, Supermas reported a net loss of RM46.4 million, compared with a net loss of RM102.4 million for the same period in FY23.

This was despite a 23 per cent drop in revenue to RM323.5 million for the six-month period in FY24.

Currently, the Supermax Group is acquiring new contracts at existing low market rates and narrow profit margins.

"The company does not expect to see a significant improvement in performance for the rest of the year 2024 due to the high volume of high-priced stocks at its overseas distribution centres."Cost management measures have helped to improve the company's profitability to an extent but the high material costs and costs of utilities currently and going forward are expected to result in continued squeeze on margins," it said.

Supermax has strategically adapted to challenging market conditions by shutting down outdated manufacturing plants and investing in new, efficient facilities.

"The plan to build 6 new modern and more efficient manufacturing blocks is still in place, with production lines being installed gradually at a pace that takes into account the current and expected market conditions," the report said.

IThey are also expanding overseas operations, notably in the USA, to mitigate rising protectionism and import barriers.

"This initiative will place Supermax in a favourable position amidst the implementation of heightened import barriers, increased import duties, and a shift towards domestic production. "We anticipate this trend not only in the US but also in other major importing nations," the statement said.

Through investments in automation technology and production capacity, Supermax aims to reduce costs and enhance competitiveness, positioning itself for growth when the glove market rebounds in the next four to five quarters.




Sumber : New Straits Times