Kossan Rubber sees mild profit growth in 4QFY19

KUALA LUMPUR (Feb 21): Kossan Rubber Industries Bhd’s quarterly net profit increased marginally to RM61 million for the fourth quarter ended Dec 31, 2019 (4QFY19) compared with RM59.5 million.

Quarterly revenue, however, was lower at RM578.34 million in 4QFY19 down a slight 1.87% from RM589.37 million a year ago. Earnings per share was at 4.77 sen versus 4.65 sen a year ago.

The rubber glove maker, whose shares have been sought after following the Covid-19 outbreak, attributed the slightly improved performance in 4QFY19 to higher volume sold, which expanded by 3.8% from a year ago.

“The results were achieved in spite of higher natural gas costs (up 5.77%), start-up costs from the recently-completed plants, as well as higher foreign worker recruitment costs compared with the previous year's corresponding quarter,” said Kossan Rubber in the quarterly result announcement to Bursa Malaysia.

Given its expansion plans and new capacity coming on-stream as well as continued improvements in operating efficiency, Kossan Rubber said its management is confident that the financial year ending Dec 31, 2020 (FY20) will be a growth year for the group.

It acknowledged and has taken precautionary measures on the seriousness of the Covid-19 outbreak.

For FY19, the rubber glove maker’s net profit grew 13.4% to RM224.78 million compared with RM198.2 million in the preceding year. As a result, earnings per share rose to 17.58 sen compared with 15.62 sen in the previous year.

Annual revenue went up to RM2.22 billion compared with RM2.14 billion in FY18.

Like its peers in the rubber glove industry, Kossan Rubber share price has been trending upwards recently amid expectation of higher sales volume due to the Covid-19 outbreak. The stock has gained 11.8% year to date. It closed at RM4.65 today giving it a market capitalisation of RM5.94 billion.