KUALA LUMPUR: The Suez Canal blockage will have minimal impacts on glove makers earnings and the consumer sector for the financial year ending 2021 (FY21).
PublicInvest research said its preliminary estimates suggested that a two-week disruption has minimal impact, although the European market accounts for 30 per cent to 40 per cent of the glove makers’ sales volume.
"However, an extended disruption might worsen the container shortage situation, resulting in revenue recognition delay for glove makers,” it said in a research note today.
Apart from that, the potentially higher freight charges should not erode the glove players’ margins as shipping costs are usually borne by buyers. While efforts glove makers typically recognise revenue when goods are delivered to the ports, however, they are expected to secure a vessel booking prior to transporting the goods to the port, hence, the vessel shortage situation might result in a revenue recognition delays.
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