Revenue tumbled 42.55% to RM394.71 million from RM687.01 million previously, attributed to lower revenue from the gloves and clean-room divisions.

Kossan said the gloves division’s revenue decreased by 47.9% year-on-year (y-o-y) to RM317.54 million during the quarter under review compared with RM609.26 million a year ago due to the lower average selling price (ASP) and volume sold.

“The company also registered a loss due to market competition, customer destocking and higher costs due to lower plant utilisation.

“Additionally, the performance during the quarter was also affected by higher energy costs due to the increase in natural gas and electricity tariffs,” it said a filing with Bursa Malaysia today.

Kossan did not declare a dividend for the quarter.

The clean-room division’s revenue fell by 26.1% y-o-y to RM21.02 million in Q1 FY2023 from RM28.43 million in the quarter a year ago due to lower ASP in clean-rooms products.

“The demand-supply imbalance continues to negatively impact the glove sector, as the oversupply of gloves arising from the pandemic-driven surge in additional capacity as well as inventory destocking from customers saw ASPs falling significantly.

“This is also exacerbated by some overseas competitors selling the gloves at lower prices in order to capture the market,” the company added.

It noted the sector faced higher energy and labour costs, and that these headwinds are expected to persist throughout FY2023, hence the group has placed its near-term expansion plans on hold.

The group’s technical rubber products (TRP) division’s revenue rose 13.9% y-o-y to RM56.15 million in the first quarter from RM49.32 million in Q1 FY2022 due to higher deliveries of TRP.

Kossan said the gradual uptick in economic activity and infrastructure spending globally will continue to spur the infrastructure and automotive segments, and the group expects the TRP division to deliver a satisfactory performance for FY2023.

It said its performance in FY2023 is expected “to be challenging” due to the headwinds affecting the glove sector.

“The global glove demand is expected to remain on a growth path as a result of a shift in glove usage due to higher healthcare standards and hygiene awareness in both the medical and non-medical sectors,” it said.

The group added it will continue to focus on effective cost management and specialised products that meet specific requirements while accelerating the transformation into digitalisation and automation across its operations to increase productivity and efficiency.

Kossan’s shares ended two sen or 1.55% lower at RM1.27, giving it a market capitalisation of RM3.25 billion.