PETALING JAYA: The gas tariff hike of 5.3% is expected to only minimally impact glove manufacturers’ earnings in the third quarter, said CGS-CIMB.

The additional cost from the tariff hikes is expected to be manageable, as gas makes up only 8% to 10% of the total cost for glove makers.

In the event that glove manufacturers fully absorb the additional cost, CGS-CIMB estimates a net increase of 0.4% to 0.5% in total costs. This will result in a minimally negative impact to the sector’s earnings by 0.4% to 1.2% for 2019 to 2021.

“We believe glove makers are likely to pass on these additional costs, given that this is an industry-wide phenomenon and they have a cost pass-through mechanism in place.

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