Kossan hints US China tariffs could benefit group’s export sales

Kuala Lumpur – Manufacturer Kossan Rubber Industries (KRI) BHD hinted its gloves division could benefit from the imposition of higher US tariffs on China.

In its commentary for its interim financial report for Q4 2024, the Malaysian group acknowledged global demand for the products would be challenging.

A particular concern would be the “ungoing uncertainties” presented by the new Trump administration in the US.

“However, the imposition of higher U.S. tariffs on Chinese-made medical gloves is expected to drive demand towards manufacturers outside China," it stated.

As the world’s largest producer of medical gloves, Malaysia would be well-positioned to benefit from such a shift, added the commentary.

Figures issued for the final quarter of the year and for the financial year ended 31 December 2024 revealed gains in both sales and net income for the company overall.

Revenue rose year-on-year by almost 20% to RM1.91 billion (€0.41 billion), from the RM1.59 billion achieved in 2023.

Profit before tax (PBT) was also enhanced – up to RM1.58 million from RM34 million.

Performance by the company’s gloves and technical rubber products (TRP) divisions diverged from each other, though.

Gloves division revenue rose 23% from RM1.29 million to 1.59 million, with PBT up to RM104.1 from a 2023 loss of 26.4 million.

By contrast, TRP revenue was slightly down year-on-year, to RM202.2 million from RM 204.6 million, with its PBT decreased by 17.5% to RM 30.9 million from RM 37.5 million the previous year.

Over consecutive quarters, gloves increased revenue 6.9% from Q3 to Q4 2024 although its PBT reduced RM4.5 million, due to the strengthening of the Malaysia ringgit against the dollar.

TRP, meanwhile, recorded a PBT increase of RM0.7 million but a substantial drop in revenue from RM61.9 million to RM41.4 million in the same period.

Kossan’s commentary attributed the TRP drop in PBT mainly to higher raw materials cost and unrealised foreign exchange loss.

It said the division anticipated further effects from an expected slowdown in infrastructure products during 2025.

For the gloves division, a proposed 2% employees provident fund contribution for foreign workers and higher labour costs could add to challenges from tariffs, it added.

On the positive side, the price of key raw materials appeared stable at present, with the group committed to enhancing cost efficiency.

This would be achieved through accelerated automation, digital solutions, continuous workforce training, and improved management systems to address the foreign labour constraints, said Kossan.

“With these ongoing strategic initiatives, we remain confident in the long-term prospects of the glove industry,” concluded the commentary.