Latexx steps up expansion to meet demand

Latexx steps up expansion to meet demand
By Ooi Tee Ching
Published: 2009/08/07


Rubber glovemaker Latexx Partners will complete eight more lines by year-end as its orders have stretched until three months ahead


Rubber glovemaker Latexx Partners Bhd (7064) is expanding more quickly than planned to meet the sudden big orders from hospitals in the US, Europe and Latin America in the wake of the influenza A (H1N1) pandemic.

"Demand for rubber gloves has been surging since April. We have to move faster as orders have stretched until three months ahead," its chief executive officer Low Bok Tek said.

"We're just completing Plant 5. There will be eight more lines by the end of this year," he added.

Latexx's cluster of factories on a 20ha site have the capacity to produce 5.2 billion pieces a year. It employs 1,800 workers, most of whom are foreigners.
It is investing RM70 million until mid-2011 to increase annual output to nine billion pieces.

"Rubber gloves are a volume game. We need to expand to reap the economies of scale and maintain our profit margin," Low told Business Times in an interview at the company headquarters in Kamunting, Perak.

"We hope the government is mindful of glovemakers' predicament and will allow us additional foreign workers to facilitate expansion," he said, adding that 45 per cent of its gloves are shipped to North America. Another 30 per cent goes to European hospitals.

Latexx, founded in 1988, offers a product mix of 59 per cent powder-free, 28 per cent powdered and 13 per cent nitrile, or synthetic, gloves. It plans to make more synthetic and fewer powdered gloves in future.

The company currently has total debt of around RM70 million, with RM27 million in cash reserves.

Last week, Latexx reported to the stock exchange that its second quarter profit in the year ended June 30 2009 jumped 10 times to RM11.41 million from a year ago. It attributed the stellar performance to increased sales of rubber gloves at better prices and lower costs from economies of scale.

While Latexx may not be as big as Top Glove Corp Bhd or Supermax Corp Bhd, it is now generating double-digit profit margins close to that of the world's most highly-mechanised glovemaker, Hartalega Holdings Bhd.

http://www.btimes.com.my/articles/latexxx/Article/