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Chairman's Statement |
 The Supermax’s global brand and products continue to be synonymous with quality and reliability in the global marketplace and continues to gain & grow market share each year. The exponential growth of Supermax’s global brand can be clearly seen in it’s climb up the leader board in the dental market to the 3rd highest position in the dental industry in USA. In the first quarter of year 2009, Supermax’s glove products have again further increased the market share among the leading branded glove in the dental industry.
Corporate Development
After a 4-year investment venture with an associate company, APL Industries Bhd (APLI), Supermax decided to call an end to its 14.09% investment in APLI by making a full and final write-off amounting to RM16.7 million in December 2008. The Management maintains that the objective to expand the business by acquisition was not wrong but it was just the wrong company that we invested into. Much efforts and management time had been put into the troubled associate company with an objective of trying to turn around the company financially. However, the legacy issues and surprises afflicting the said associate company were numerous and complex. In addition, the onset of the global financial crisis & global credit crunch simply made the task of restructuring and recapitalizing the troubled associate company even more difficult and as a result, the Management took the firm and final decision to ‘jettison the baggage’.
With the full impairment of the APLI investment in December 2008, the Supermax Group has started with a clean slate starting from January 2009 onwards.
Financial Performance
With the exception of one time write off on the abovementioned investment, the Supermax Group had actually performed remarkably well. The Group has achieved a record Sales Turnover of RM811.8 million in FY 2008 as compared with RM574.2 million for FY2007. The Profit Before Tax (PBT) of RM68.33 for FY2008 as compared with PBT of RM58.55 for FY2007 was also achieved. This represents an increase of 41.36% sales growth and 16.70 % PBT growth year on year respectively.
Challenges
Being a 100% Export Oriented Company, the volatility of latex raw material prices and Foreign Exchange will remain the main challenges to the Supermax Group. However, the increase in utility costs by the Government in Malaysia such as the increase in natural gas prices, water and electricity tariffs will have serious impact on global competitiveness of Made in Malaysia Products & Services; that include latex examination gloves. The imposition of double levy on foreign workers which has been currently put “On Hold” if implemented will add further burden & will further affect global competitiveness to all glove manufacturers operating in Malaysia including Supermax Group. Currently, Synthetic Nitrile PF Gloves Made in China is more competitive than Nitrile Gloves Made in Malaysia. The Synthetic Vinyl PF Gloves from China is much more competitive than Latex PF Gloves from Malaysia especially in the Industrial and Food Services sectors.
The volatility of latex raw materials and foreign exchange are part of the regular routine portfolio for glove manufacturers including Supermax to monitor regularly. The higher the volatility, the more frequency of glove price adjustments. It has becomes a norm for glove manufacturers, importers, distributors to adjust glove prices according to the volatility of latex prices and fluctuation of foreign exchange.
To mitigate the competitiveness, the demand and consumption changes of Nitrile vs. NR Latex Examination Gloves, the Supermax Group has invested into production lines which are capable to switch its capacity from Nitrile gloves to Natural Rubber Examination gloves production, increase in productivity and efficiency of each & every manufacturing plants.
Positive Outlook Going Forward
The recent unfortunate Type A H1N1 influenza virus outbreak is also expected to provide a boost to the Group’s performance for year 2009. The demand and consumption of Medical Examination Gloves continue to remain strong and we are very busy in fulfilling the shipments that were placed by regular customers. As at to date, Supermax exports to more than 145 countries with 750 distributors around the world. In addition, Supermax operates distribution centers in strategic markets and countries through our wholly owned subsidiary and associate companies. We expect profits contribution from distribution to remain stronger in year 2009 as we are experiencing higher margins being enjoyed in distribution activities.
Going forward, since January, 2009 the management team are focusing fully on the wholly owned manufacturing plants and on among others; risk management, trade receivables management, inventory management, productivity and efficiency management & minimizing wastage and growing organically.
Corporate Social Responsibility
“Protect your health, protect the environment”
Supermax is in the business of health protection and we believe in sustainable business practices where protecting resources of the environment is an integral part of achieving business efficiency and cost savings. This translates to better performance and greater returns to Shareholders. Among the environmentally friendly initiatives undertaken by Supermax Group are:
Renewable energy with biomass boilers
Three of Supermax’s manufacturing plants are installed with biomass boilers which uses the latest technology in movinggrate auto-feed smokeless combustion system designed specifically for the glove manufacturing industry to achieve high efficiency. To generate heat, the boilers burns woodchips and palm kernel shell waste and this helps to counter the impacts of climate change.
The biomass boilers are able to provide substantial savings on energy cost compared with energy generated from fossil fuels.
Wastewater treatment
The wastewater from the Supermax Group’s manufacturing facilities is treated on site in effluent treatment plants utilising a chemical flocculation, anaerobic digestion and activated sludge process. The Company collaborates with the Department of Environment to conduct regular checks to ensure full compliance with the Department’s standards on final discharge.
This ensures that the environment surrounding the Supermax Group’s manufacturing facilities continues to stay healthy and green.
Rubber glove waste for recycling
Supermax recorded less than 0.5% rate of rejected gloves as waste in 2008. The Group’s stringent quality management system program coupled with the consistency in manufacturing process control ensure low rate of rejection and whatever little reject gloves there are, together with rubber waste or lumps arising from the production process, are collected and forwarded to rubber recycling companies who will process them and return the rubber for further use as part of the raw materials.
Acknowledgement
I would like to express sincere appreciation to the Board of Directors for their unwavering support, commitment and contributions to see through the group’s various initiatives over the years. My thanks also to the Management Team and all staffs of the group who were so important and crucial in ensuring the vision, mission and strategies of the Group were implemented and materialized.
On behalf of the Board of Directors, I would like to offer my heartfelt thanks to all our loyal & long term Shareholders, Customers, Business Partners around the world and some of the Bankers for their unwavering commitment, support and confidence in Supermax Group over the years.
Thank you.
Dato' Seri Stanley Thai
Executive Chairman cum
Group Managing Director
May 28th 2009
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