KUALA LUMPUR (May 25): Kossan Rubber Industries Bhd net profit dropped 9% to RM46.53 million or 7.28 sen per share for the first quarter ended March 31, 2017 (1QFY17), from RM51.31 million or 8.02 sen per share in 1QFY16, due to higher raw material prices.

Quarterly revenue, however, expanded 21% to RM499.97 million from RM412.28 million in the previous year.

Kossan attributed the increase in revenue to greater contribution from its three divisions, namely technical rubber, rubber gloves and cleanroom, due to higher sales volume and a stronger US dollar.

However, a spike in raw material prices had impacted its profit for the quarter.

"For 1QFY17, the glove division registered an approximately 7.5% increase in quantity sold and all the production plants continued to operate above 80% of its installed capacity after the completion of revamp and upgrading work since 4QFY16," said the group.

It added that the glove division was the main driver of revenue and pre-tax profit growth during the quarter under review, while its technical rubber and cleanroom division saw lower profit, due to the surge in raw material prices and reversal of translation gain in foreign currency receivables.

Going forward, the group expects to register healthy growth and earnings for FY17 as it continues to improve operational efficiencies, quality of products and cost controls.

Kossan said it is at the final planning stage to build two new plants, which will begin construction within the first half of 2017 and to commence commercial production in 2QFY18 and 4QFY18.

"These two new plants — which are equipped with high speed dipping technology and high degree of automation — are capable to produce up to 4.5 billion pieces of nitrile glove per annum," it said.

The group's research and development centre is also on schedule to be completed in September 2017, it added.

Kossan fell three sen to RM6.51, giving it a market capitalisation of RM4.16 billion.