17 November, 2005

KOSSAN RUBBER POSTS PRE-TAX PROFIT OF RM21.808 MILLION FOR FIRST 9 MONTHS OF 2005
- OVERALL OUTLOOK FOR THE GROUP REMAINS PROMISING WITH GROWING DEMAND IN GLOVES AND INDUSTRIAL RUBBER PRODUCTS

Kossan Rubber Industries Berhad announced to Bursa Malaysia its 3rd Quarter financial performance for FY2005 this evening. For the quarter ended 30 September 2005, the Group recorded significantly higher revenue of RM106.812 million translating an increase of 38.2% against the revenue of RM77.269 million achieved during the same quarter in the previous financial year. Profit after tax surged 30.7% to RM7.628 million from RM5.836 million recorded in the preceding year corresponding quarter.

For the current cumulative year to date 30 September 2005, the Group achieved revenues of RM280.680 million and profit after tax of RM21.808 million as compared to revenue of RM207.435 million and profit after tax of RM17.066 million recorded in the corresponding period ended 30 September 2004, translating a growth rate of 35.3% and 27.8% respectively. The significant improvement in revenues and profit after tax were mainly attributed to expanded glove production capacity with a new 9 production lines since early of this year coupled with rising demands on both glove and technical rubber products. Currently, Kossan Rubber is operating with 49 production lines that able to produce 3.9 billion pieces of glove per annum.

“Our stringent quality and cost control policies through strict benchmarking processes, better product mix with higher distribution in premium glove products and aggressive marketing effort are the vital ingredients to the overall growth,” said Kossan Rubber’s Managing Director Mr. K S Lim.

The business of the Group continues to expand, both for the technical rubber products and gloves. The expansion program to install another 26 production lines is progressing well with first 13 lines, which cater mostly for powder-free and nitrile gloves is targeted to commence commercial production by February next year and the commissioning of the remaining 13 lines is expected to complete and fully operational by June next year. This will raise the current glove production capacity of Kossan Rubber to 6.0 billion pieces from 3.9 billion pieces currently per annum.

“Currently, we do not have any spare capacity to fill up the increasing order from our customers as our lines are running almost at maximum capacity now. We need fresh capacity immediately in order to grow with them,” explained Mr. K S Lim.

While the outlook for the industry remains excellent, recent sharp rises in the price of crude petroleum (to produce synthetic rubber and fuel) and latex, both main materials used by the Group, have affected the gross profit margin marginally due mainly to the time lapse between adjustments and increased cost.

Despite the above development, the Group is optimistic of continuing to achieve positive results in 2005 riding on the strong demand growth in the Group’s rubber gloves and industrial rubber products.