KUALA LUMPUR – A nitrile glove price war will begin in the second half of this year as nitrile latex suppliers have over-expanded their capacity, said Supermax Corp Bhd executive chairman and group managing director Datuk Seri Stanley Thai.
Thai said that for this year, there would be additional 250,000 wet tonnes of nitrile latex available in the market.
“Margins of nitrile gloves could be lower than the competitive level of 11% to 15% this year, taking into account production from Indonesia and Thailand as well,” he said at the company’s media and analyst briefing.
Supermax’s current capacity mix comprises 60% of natural rubber gloves, with the balance made up of nitrile gloves.
Glove makers had switched to producing more nitrile gloves from rubber gloves last year in line with stronger rubber prices, which make up more than 60% of rubber glove production cost.
Still, Thai said Supermax aimed to achieve a “conservative” earnings growth of 20% this year, backed by new high-productivity lines, additional capacity for surgical gloves and new glove products.
“We expect extra earnings starting from the third quarter of this year from these new products,” he said, without being specific on the new offerings.
Thai also said the glove maker would “work with a competitor’ to market surgical gloves to the developing markets” as part of its earnings growth strategy.
“We will not fight with the multinationals for surgical gloves market in the developed markets but will focus on developing markets like China, Middle East and India.”
Given its higher earnings projection, Thai said Supermax would increase its dividend policy to 30% of net profit for the current fiscal year ending Dec 31, 2012 from 20% in the fiscal year ended Dec 31, 2011 (FY11).
For FY11, Supermax made a net profit of RM 106.1 million on revenue of RM 1.03 billion.
Thai said Supermax would go on a roadshow soon to boost foreign shareholdings in the company. As at last month, Supermax’s foreign shareholdings stood at 13.61% while local institutional shareholdings were at 30.43%.
Source: The Star