PETALING JAYA: Supermax Corp Bhd remains optimistic on its financial year 2020 prospect despite posting a lower net profit in the first quarter (Q1) ended September 30, 2019.
Chairman Albert Cheok said this is despite trade uncertainties and its impact on average selling prices (ASP).
On Thursday, Supermax reported a Q1 net profit of RM24.75 million, down 31 per cent from RM35.94 million recorded in the same quarter last year, due to lower average selling prices and an increase in production costs.
“In terms of global headwinds, there are issues such as the US-China trade war and Brexit. These all have repercussions and affect confidence.
“But we are in a necessary commodity business, especially as 90 per cent of our glove sales are in the medical area. That augurs well for us.
“In Q1, our cost of production went up, largely due to utilities (water, electricity and gas). For gas, we are trying to find alternative uses,” Cheok told reporters after the group's annual general meeting here today.
Cheok said over the long term, the group's strategy is to sustain a profitable margin by increasing productivity.
“We will also be relying more on technology. Our production plants will become computer or AI driven. All our new plants that are coming up will also be high-tech, and existing ones upgraded,” he said.
Supermax is spending RM1.1 billion to increase the production capacity from the current 24 billion pieces per annum to 27.4 billion pieces by 2020 and 44.1 billion pieces per annum by 2024.
The expansion plans and the rebuilding and replacement programme will also improve its production efficiency and earnings margin.
“In addition, all our new production lines are interchangeable, where we will be able to adjust the production quantity of our natural rubber gloves and nitrile gloves based on the market demand,” it said.