Riverstone posts 80% drop in H1 earnings to RM209m amid glove oversupply

MAINBOARD-LISTED specialised cleanroom and healthcare glove manufacturer Riverstone Holdings on Thursday (Aug 11) reported earnings of RM208.9 million (S$64.3 million) for the first half ended June, sinking 79.9 per cent from RM1.04 billion in the year-ago period.

Earnings per share fell to 14.1 sen, from 70.22 sen in the previous year.

H1 revenue fell per cent to RM754.3 million, compared to RM2.02 billion in the corresponding 6-month period last year.

Gross profit decreased 79.3 per cent to RM288.3 million, as gross profit margin slid 30.9 percentage points to 38.2 per cent due to a lower average selling price.

Riverstone executive chairman and chief executive Wong Teek Son said: “The extensive investment in production expansion from the investments made by the market and new players during the Covid-19 peaks has resulted in a current oversupply of gloves and inventory.”

He noted that the Malaysian Rubber Glove Manufacturers Association has lowered its projected global demand for rubber gloves for 2022 by 12 per cent, confirming “the short-term challenges of the industry in Malaysia”.

However, the glove manufacturer is moving ahead with plans to build a new cleanroom facility in each of its locations in Bukit Beruntung and Taiping in Malaysia to hold on to its pole position in the cleanroom gloves segment.

“This would enable us to meet surges in cleanroom glove demand in the future. The technical requirements have also made it difficult for competitors to affect our market leadership position for customers new and old,” Wong said.

“Our planned expansion to increase capacity to 12 billion for end 2022 is on track, while we continue to fortify our cleanroom gloves segment,” he added.

SEE ALSO

Riverstone’s Q1 net profit drops 79.2% as demand for healthcare gloves normalises

The Riverstone board has recommended an interim dividend of 10 sen per share, unchanged from the corresponding period last year.

Shares of Riverstone fell 3 per cent or S$0.025 to S$0.805 on Thursday, before the results were announced.