Lower ASP, sales orders from key customers drag Careplus' 3Q into the red

Lower ASP, sales orders from key customers drag Careplus' 3Q into the red
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KUALA LUMPUR (Nov 25): Careplus Group Bhd posted a RM30.21 million net loss or loss per share of 5.31 sen for the third quarter ended Sept 30, 2022 (3QFY2022) compared with a RM8.37 million net profit or earnings per share of 1.51 sen for the same period last year.

The decline in earnings for 3QFY2022, the group's fourth consecutive loss-making quarter since 4QFY2021, was due to a deterioration in average selling price (ASP) and lower sales orders from key customers during the quarter under review, in contrast with 3QFY2021 in which ASP and demand for medical gloves peaked at all-time highs.

This was in addition to costs of production being adversely impacted by the increase in minimum wage in Malaysia under the gazetted Minimum Wage Order 2022 and the increase in natural gas tariffs.

Quarterly revenue dropped 52.08% to RM48.32 million from RM100.84 million in the same period a year earlier, its bourse filing on Friday (Nov 25) showed.

For the cumulative nine months ended Sept 30, 2022 (9MFY2022), Careplus plunged into a RM103.18 million net loss from a RM236.99 million net profit posted for the same period a year ago as 9MFY2022 revenue fell 63.46% to RM216.03 million from RM591.22 million.

Looking ahead, Careplus said it deems its business outlook to be challenging as it navigates through the uncertainty of ASP for gloves, rising cost structure, geopolitical tensions and stiff competition, with current ASP being depressed by overhang stock.

As such, the group shall focus its efforts on securing new orders to improve utilisation rates of production lines and place greater emphasis on cost management to ensure that the performance is on the trajectory of improvement.

"The group remains optimistic of the longer-term prospects of the gloves sector underpinned by growing demand for gloves post pandemic as gloves have been proven to be a critical medical device for contagious disease control despite there being short-term setbacks in the next few quarters under a very challenging environment," it added.

Careplus' share price finished 3.5 sen or 6.86% lower at 47.5 sen on Friday, bringing the group a market capitalisation of RM272.2 million.

Isabelle Francis