Riverstone reports 23.9% net profit jump in Q2
The Malaysian healthcare gloves manufacturer said earnings for the second quarter ended 30 June 2018 totalled RM33.6 million
Riverstone, the manufacturer of specialised cleanroom and healthcare gloves, has announced its financial results for the second quarter ended 30 June 2018 (2QFY18). Revenue increased 0.5% year-on-year (yoy) from RM213.2 million in 2QFY2017 to RM214.2 million in 2QFY2018.
The majority of the group's revenue is denominated in US, hence the group's performance is susceptible to foreign exchange fluctuations. "Because the Malaysian ringgit (RM) strengthened against the US during 2QFY18 as compared to 2QFY17, the group's revenue was flat at RM214.2 million despite higher sales volume," the company said in a statement.
The group’s gross profit increased 10.6% yoy to RM48.3 million while gross profit margin expanded two percentage points to 22.5%. This increase in gross profit margin was mainly attributable to lower raw material costs and foreign exchange rates during 2QFY2018 as compared to 2QFY2017.
Commenting on the results, Wong Teek Son, executive chairman and CEO, said: "Despite continued macroeconomic challenges, such as foreign exchange rate volatility and fluctuations in raw material prices, we remain in growth mode. Internally, we are focused on improving operational efficiency, tightening cost controls and progressively introducing automation within our production processes."
The CEO said Riverstone's ability to generate strong positive operating cash flows coupled with a resilient balance sheet will allow the company "to navigate the headwinds as we continue to chart steady growth”.
Riverstone has recently completed the construction of a new plant for the phase 5 of its capacity expansion plans. "Accordingly, we will commission production lines over the remainder of FY2018 as we continue our growth trajectory," Wong said.
Upon completion, the project will bring Riverstone's total annual production capacity from 7.6 billion gloves to 9 billion gloves by end FY2018.
"While increasing total production capacity, we are also intensifying sales and marketing efforts to increase order allocation from new and existing customers.," Wong explained.
In anticipation of phase 5 of the group’s capacity expansion plans, management continues to ramp up its sales efforts to and capture growth.
With higher sales volume expected in the coming quarters, the group’s balance sheet recorded a hike in inventories to RM95.3 million as at 30 June 2018 (RM71.1 million as at 31 December 2017). "With the bulk of inventories comprising mainly work-in-progress and finished goods, the significant increase in inventories is in line with the expected ramp up in orders," the company said.
Malaysia-based Riverstone manufactures nitrile and natural rubber cleanroom gloves used in highly controlled and critical environments, as well as premium nitrile gloves, used in the healthcare industry.
The company employs more than 3,000 people throughout six manufacturing facilities in Malaysia (4), Thailand (1) and China (1) with an annual production capacity of 7.6 billion gloves as at 31 December 2017.
Riverstone has an established global network of sales offices to serve its customers in Singapore, Malaysia, Thailand, the Philippines, China and the US.