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发表于 10-3-2009 11:11 AM
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Tuesday March 10, 2009
Ringgit weakness helps glove makers
By YEOW POOI LING
PETALING JAYA: The prevailing weakness of the ringgit against the US dollar is an added boost to glove makers, as it will mean higher foreign exchange (forex) translation gains.
Glove makers that serve the healthcare sector predominantly are already enjoying good profits, as the demand from that industry has remained resilient despite the present economic downturn.
Year-to-date, the ringgit has depreciated more than 7% against the greenback.
Top Glove Corp Bhd executive director Lim Cheong Guan said some raw materials were imported, hence there would be some impact on the company on the cost side.
Considering this, the ringgit’s depreciation would not translate into 100% improvement in earnings but a direct benefit of about 4.2% on profit before tax, he told StarBiz in an email reply.
The glove maker, which is the biggest in the country in terms of capacity, expects the US dollar to continue to strengthen against the ringgit.
“The ringgit is unlikely to strengthen (against the US dollar) in the near term as Malaysia has just started to feel the effects of the economic slowdown,” he said.
On raw materials, Lim said latex prices were anticipated to remain low, hovering around RM4 per kilo, as demand from the motor vehicle sector was unlikely to recover strongly this year.
Nonetheless, the low prices of rubber, if prolonged, would not bode well for the glove sector in the long term, as it could discourage plantation owners from planting new trees, affecting future supply of rubber, he added.
Top Glove intends to maintain its 30% dividend payout ratio. “As our earnings increase, the total sum of dividend paid out would also increase,” he said.
Meanwhile, Hartalega Holdings Bhd deputy managing director Kuan Mun Leong, in a recent interview with StarBiz, said forex gains were only a temporary phase, as the volatility of currencies eased.
“Once they stabilise, the impact would become neutral,” he said.
Kossan Rubber Industries Bhd group corporate affairs senior manager Edward Yip, meanwhile, said any benefits generated from forex translation gains would be passed back to buyers.
“In our business model, we are making a fixed quantum of profit per 1,000 gloves sold regardless of the exchange rate and production cost fluctuations,” he said.
This was the firm’s “mutual benefits business policy” with its customers in the past 10 years, he added.
Last Friday, shares in Top Glove closed at RM4.72, Hartalega RM2.09, Kossan RM2.94 and Supermax Corp Bhd 86 sen.
http://biz.thestar.com.my/news/story.asp?file=/2009/3/10/business/3440357&sec=business |
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