Riverstone Q3 profit slips on higher marketing expenses

RIVERSTONE Holdings saw its net income slip 6.5 per cent year-on-year to RM32.1 million (S$10.6 million) for the third quarter ended Sept 30.

This came as its gross profit slipped 9.2 per cent, on the back of substantially higher cost of sales for the period.

The Malaysia-based maker of specialised cleanroom and healthcare gloves said it had recorded a 20.6 per cent increase in selling and distribution expenses during the quarter, as it extended its sales and marketing efforts to regions such as the United States. It said this was to tap the "rising demand for both its cleanroom and healthcare gloves", and in line with its efforts to secure orders for the remaining production capacity scheduled to come onboard.

Revenue for the period increased 27.5 per cent year-on-year to RM239.5 million, as demand for its cleanroom and healthcare gloves "continued to grow in tandem with its capacity expansion plans".

Executive chairman and CEO Wong Teek Son said: "While we leverage upon our competitive advantage as an industry-renowned provider of customised solutions for the cleanroom glove segment, we remain mindful of the opportunities present in the burgeoning healthcare glove market as well.

"Recently, the US Pharmacopeia (USP) Convention announced guidelines describing best-practice standards to promote stringent hygiene in US hospitals and labs. Known as the USP 800, healthcare workers working in pharmacies and hospitals are recommended to don two pairs of gloves when handling hazardous drugs. With these standards slated to come into effect in December 2019, we expect to see an uptick in US healthcare glove orders from the third to fourth quarter of 2019, should the guidelines be widely enforced."

Riverstone shares closed unchanged on Thursday at S$1.19.