Aspen reports 2H21 swung to net loss as latex glove prices fall

Malaysia ringgit notesMalaysia ringgit notes

Aspen (Group) Holdings reported Friday its second half swung to a net loss of 59.40 million ringgit from a year-ago net profit of 85.39 million ringgit on lower property revenue and as the healthcare segment, which manufactures latex gloves, isn’t yet operating at an optimum level.  

Revenue for the six months ended 31 December dropped 64 percent on-year to 62.40 million ringgit, the property and healthcare company said in a filing to SGX. 

“The decline of revenue in the property development segment is due to a lower take up rate in the group’s property and slower construction progress due to the Covid-19 pandemic. As for the healthcare segment, ongoing global supply chain challenges, higher shipping and logistics costs, prolonged shipping delays, higher production and energy costs, lower capacity utilisation rate and continuous decline in the average selling prices (ASP) of gloves had impacted the performance of healthcare segment … the healthcare segment has not [been] operating at its optimum level of operation to achieve cost efficiency at its infant stage of operation.”

In September, Aspen said its 70 percent-owned indirect subsidiary Aspen Glove had obtained 510(k) premarket notification clearance from the U.S. Food and Drug Administration to market latex examination powder-free gloves in the U.S.

For the full year, Aspen reported a net loss of 75.57 million ringgit, swinging from a year-earlier net profit of 72.73 million ringgit. Revenue for 2021 fell 35 percent on-year to 185.1 million ringgit, the company said. 

Outlook

In its outlook, Aspen said the recovery of Malaysia’s economy from the pandemic is likely to reduce the unemployment rate and improve business and consumer confidence, which would create a conducive environment to revive homeownership plans or aspirations. 

“The group is cautiously confident that demand will increase and stabilise the property market in 2022,” Aspen said. 

For the glove-making segment, Aspen said margins were expected to compress further amid falling average selling prices (ASPs) and rising operating costs, and as a price war appears to be emerging with Chinese glove makers attempting to win market share. 

“Amidst the falling ASPs, glove buyers have refrained from stocking up on gloves to avoid locking in purchases at high prices. However, with glove prices slowly approaching pre-Covid levels, the restocking activities could gradually resume,” Aspen said.