Challenging FY18 for ES Ceramics, says CEO

TheEdge Wed, Oct 25, 2017 01:59pm - 6 years View Original


KUALA LUMPUR (Oct 25): ES Ceramics Technology Bhd, whose annual net profit had shrunk for the first time in six years in its financial year ended May 31, 2017 (FY17), is bracing for an even more challenging FY18 as price competition among glovemakers dragged orders for its glove former molds.

"The prospects for next year, I believe, could be harder than this year," chief executive officer Wong Fook Lin told reporters on the outlook for ES Ceramics after the company's 14th annual general meeting here today. "Glove price competition is so stiff in the marketplace today.

"Some (of) our customers have taken a stand not to participate in the price war, and hence lose out on sales. Their clients are also taking a wait-and-see approach as well [on prices before placing new orders].

"All that pose an environment that is very difficult for us to operate, as we saw a decline in our order book over the last few months in tandem with [the market development]," said Wong.

While emphasising that the global market demand for rubber gloves has seen single-digit growth on-year over the last few years, Wong noted that the key glovemakers have been "expanding so aggressively over the years".

"The market environment will be challenging, [at least] until all these excess capacity is taken up or normalise," said Wong.

ES Ceramics produces glove former molds for glovemakers, with clients including big names such as Top Glove Corp Bhd.

Its FY17 saw net profit drop 28.84% on-year to RM6.33 million, while revenue rose 11.06% to RM33.27 million. It attributed the lower profit margin to higher energy and material costs, as well as more competitive pricing.

To increase utilisation and tackle the lack of demand, Wong said the company is currently looking to diversify its clients to include other players in the dipping industry outside of rubber gloves segment. "But that is still at its infancy stage," he added.

At noon market break, shares of ES Ceramics traded 1.41% or half a sen higher at 36 sen for a market capitalisation of RM73.99 million.

 

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