19 August, 2005

KOSSAN RUBBER POSTS UNAUDITED AFTER TAX PROFIT
OF RM14.180 MILLION FOR FIRST HALF OF 2005
- OVERALL OUTLOOK FOR THE GROUP REMAINS POSITIVE WITH GROWING DEMAND IN GLOVES AND INDUSTRIAL RUBBER PRODUCTS

Kossan Rubber Industries Berhad announced to Bursa Malaysia its 2nd Quarter financial performance for FY2005 this evening. For the quarter ended 30 June 2005, the Group recorded significantly higher revenue of RM88.460 million translating an increase of 24.1% against the revenue of RM71.282 million achieved during the same quarter in the previous financial year. Profit after tax surged 20.0% to RM7.187 million from RM5.988 million recorded in the preceding year corresponding quarter.

For the current cumulative year to date 30 June 2005, the Group achieved revenues of RM173.867 million and profit after tax of RM14.180 million as compared to revenue of RM130.165 million and profit after tax of RM11.230 million recorded in the corresponding period ended 30 June 2004, translating a growth rate of 33.6% and 26.3% 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. Currently, Kossan Rubber is operating with 49 production lines.

“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 per annum.

“We have insufficient capacity to fill up the increasing order from our customers as our lines are running at not less than 95% of its installed capacity. 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, may have an impact on the profit margins. However the Group is confident such impact is only temporary as such cost increases can be passed on to customers.

The removal of the Ringgit Peg against the US Dollar, has resulted in a slight appreciation of the Ringgit. The Group has and continuously to hedged its sales and forecasted sales in US Dollar, thereby reducing the impact of the appreciation of the Ringgit.

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.