PETALING JAYA (Nov 29): Supermax Corp Bhd said it is optimistic of doing well this year despite global headwinds and its impact on selling prices.

Supermax chairman Albert Cheok said the drop in the group's first quarter net profit is not indicative of the group's performance this year.

Yesterday, the group said net profit for the first quarter ended Sept 30, 2019 (1QFY20) fell 31% to RM24.75 million or 1.89 sen a share from RM35.94 million or 2.73 sen a share a year earlier.

It said the drop was due to lower average selling prices and an increase in production costs.

"In terms of global headwinds, there are issues such as the US-China trade war, Brexit. These all have repercussions and affect confidence.

"But we are in a necessary commodity business, especially as 90% of our glove sales are in the medical area. That augurs well for us.

"In 1Q, our cost of production went up, largely due to utilities (water, electricity and gas). For gas, we are trying to find alternative uses," Cheok told reporters after the group's annual general meeting here.

In the long term, Cheok said the group's strategy is to sustain a profitable margin by increasing productivity.

"So we will also be relying more on technology. Our production plants will become computer or Artificial Intelligence driven. All our new plants that are coming up will also be high-tech, and existing ones upgraded," he said.

At the midday break today, Supermax shares fell 4.23% or 6 sen to RM1.36, valuing it at RM1.85 billion.