Riverstone Q4 net profit rises to RM331.1m, full-year profit reaches record high

MALAYSIAN glove maker Riverstone Holdings posted a net profit of RM331.1 million (S$108.8 million) for the fourth fiscal quarter ended December 2020, up from RM32.1 million in the year-ago period.

This pushed the group's net profit for FY 2020 to a record-high of RM647.3 million, versus RM130.4 million in FY 2019.

For the fourth quarter, the group reported higher revenue of RM720.8 million compared to RM257.4 million in the corresponding quarter last year.

Revenue for the full fiscal year also rose 85 per cent to RM1.83 billion from RM989 million in FY 2019. Riverstone said the increase was attributable to higher quantities of both healthcare and cleanroom gloves being shipped.

The group's gross profit for the year rose to RM897.6 million from RM198.9 million, and its gross profit margin increased 29 percentage points year-on-year (y-o-y) to 49.1 per cent.

The "marked increase" in sales activities over the year had also resulted in higher expenses for the company. Selling and distribution expenses rose 25 per cent y-o-y to RM22 million, while general and administrative expenses increased 57.3 per cent to RM34.4 million.

Riverstone has recommended a special dividend of four sen per share and a final dividend of 16 sen per share, bringing its total dividends for FY 2020 to 22 sen. The final dividend is subject to shareholders' approval at the forthcoming annual general meeting.

As part of its expansion plans, Riverstone is looking to add 1.5 billion pieces of gloves - all of which have already been booked by customers - to its annual production capacity in 2021. This will bring its total capacity to 12 billion pieces of gloves per annum by the end of this year.

The group added that its two further expansion phases from 2022 to 2023 are projected to increase capacity by 1.5 billion pieces of gloves per annum, to a total of up to 15 billion by end of 2023.

However, Riverstone noted that macroeconomic headwinds such as US dollar fluctuations, volatile raw material prices and increases in overall production costs continue to pose challenges.

Riverstone's chief executive Wong Teek Son said he expects demand for the firm's healthcare examination gloves to remain robust as healthcare systems around the world continue to fulfil immediate supply shortfalls as well as replenish reserves.

Said Mr Wong: "Apart from the healthcare segment, we continue to differentiate ourselves from our industry peers via our high-end cleanroom glove business which has experienced significant growth, driven by the advent of 5G technology and manufacturing industries including lenses, batteries and semiconductors.

"For the foreseeable future, we believe that glove demand for healthcare and cleanroom gloves will remain high due to ongoing Covid-19 testing and vaccine roll-out which require the usage of gloves."

Shares in Riverstone closed at S$1.36 on Friday, down 0.7 per cent or S$0.01.