Kossan Rubber Industries (KLSE) Q3 2024 earnings summary

Executive summary

• Revenue for 9M24 rose 17.1% year-over-year to RM 1.39 billion, with profit before tax up 268% to RM 119.3 million, driven by improved glove sales and production efficiencies.

• 3Q24 revenue increased 25.8% year-over-year to RM 507.4 million, but profit before tax declined 18.8% to RM 39.7 million due to higher raw material costs and unrealised forex losses.

• The Group remains cautiously optimistic for FY2024, expecting redirected US demand for gloves due to higher tariffs on Chinese products, but faces challenges from ringgit appreciation and labor constraints.

Financial highlights

• Net profit after tax for 9M24 was RM 94.2 million, up 505.6% year-over-year; EPS for 9M24 was 3.62 sen versus 0.53 sen in 9M23.

• Cash and bank balances stood at RM 1.12 billion as of 30/09/2024, down from RM 1.27 billion at end-2023.

• Net assets per share was 150.07 sen as of 30/09/2024.

• Total equity at 30/09/2024 was RM 3.86 billion.

• Interim and final dividends totaling 4.0 sen per share (RM 102.06 million) were paid in 2024; a further 8.0 sen per share declared for FY2024.

Outlook and guidance

• US tariffs on Chinese gloves are set to rise to 50% in 2025 and 100% in 2026, likely boosting Malaysian glove exports.

• Benefits from redirected demand may be offset by ringgit strength and foreign worker supply constraints.

• The Group is focusing on automation, digitalization, and sustainability to enhance cost efficiency and meet potential demand.

• TRP division expects a slowdown in infrastructure projects in Q4FY2024 but aims for satisfactory FY2024 performance.