Sri Trang Agro-Industry Q2 earnings tumble 77% as glove slowdown pummels profit margin

RUBBER company Sri Trang Agro-Industry (STA) on Wednesday (Aug 10) announced earnings of 1.14 billion baht (S$44.3 million) for the second quarter ended June, down 77.4 per cent from earnings of 5.04 billion baht in the corresponding quarter a year ago.

Group revenue fell 6.1 per cent year on year to 27.97 billion baht in Q2, as revenue from gloves was halved to 6.42 billion baht due to a lower average selling price (ASP), despite a 33.3 per cent rise in sales volume.

"The market currently has to contend with a slowdown in demand as a result of overstocking during Covid-19 and it would take some time for adjustment," STA said in a bourse filing.

The decline in total revenue was partially mitigated by an increase in revenue from natural rubber products, which climbed 28.4 per cent to 21.54 billion baht on the back of higher ASP and sales volume.

The natural rubber products segment - comprising technically specified rubber, ribbed smoked sheet and concentrated latex - accounted for 77 per cent of total revenue.

Gross profit fell 61.3 per cent to 4.24 billion baht, largely due to the steep drop in ASP of gloves amid increasing supply.

Net profit margin plunged 12.8 percentage points to 4.1 per cent in Q2, from 16.9 per cent in the corresponding quarter a year ago, while gross profit margin was more than halved to 15.2 per cent, compared to 36.7 per cent in Q2 FY21.

STA has declared an interim dividend of 1 baht per share for the first 6 months of FY22.

Shares of STA closed flat at S$0.85 on Wednesday, before the results announcement.

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