Sri Trang Agro-Industry (Sri Trang Agro) announced a profit of THB517.3 million ($20.03 million) in its 3QFY2024 ended September update released on Nov 8, reversing from a loss of THB410.2 million in the previous corresponding period.

 

This was driven by the performance of natural rubber (NR), which saw higher sales volumes and average selling price (ASP) due to robust demand, especially for European Union&rsquo s Deforestation Regulation (EUDR) rubber.

 

Earnings per share for the period stood at THB0.34.

 

Sri Trang Agro reported a revenue of THB31.62 billion, representing a 87.3% y-o-y increase from THB16.88 billion in FY2023. Revenue from NR accounted for 79.7% of total revenue, growing 106.1% y-o-y.

 

Sales volume of NR in 3QFY2024 totalled 380,565 tonnes, growing 53.1% y-o-y &mdash recording the fourth consecutive quarter of volume growth.

 

Sale volume of EUDR rubber totalled 62,755 tonnes, accounting for 16.5% of total sales volume, as tire producers were stocking up in preparation for the implementation of the EUDR.

 

Sri Trang Agro&rsquo s gross profit in 3QFY2024 totalled THB3.29 billion, increasing 122.5% y-o-y. 

 

Gross profit margins in 3QFY2024 stood at 10.4%, up from 8% in 3QFY2023.

 

Within products, gloves bore the brunt of the rapidly appreciating Thai Baht, which impacted ASP. The high latex costs from 2QFY2024 also led to lower profit margins.  

 

Overall, demand in 3QFY2024 has significantly improved compared with the same period in 2023.

 

NR supply in Thailand has returned to normal, the NR supply situation in Indonesia remains unchanged while NR supply in Ivory Coast continues to provide high yield, growing by over 16% during the past year.

 

NR prices in 4QFY2024 have been volatile. 

 

At the start of 4QFY2024, the market continued its momentum from 3QFY2024 and received a boost from the Chinese government&rsquo s stimulus measures which led to a price of TSR20 on Singapore Commodity Exchange to reach a high of $2.18 per kg.

 

However, the proposal to delay by one year the implementation of the EUDR has caused uncertainty and led the price of TSR20 to move between $1.90 to $2 per kg following the announcement.

Revenue from products and services up 87.3% at 31.6b baht

 

RUBBER group Sri Trang Agro-Industry : NC2 +5.81% reported a net profit of 517.3 million baht (S$20 million) for the third quarter ended Sep 30. This is a reversal from the net loss of 410.2 million baht in the corresponding year-ago period.

 

In a business update on Friday (Nov 8), the group said the net profit was driven by the performance of natural rubber, which saw higher sales volume and average selling prices driven by robust demand.

 

In particular, the demand for European Union Deforestation Regulation (EUDR) rubber &ndash which is sourced following the European deforestation regulation &ndash saw increased demand which contributed to the higher profit margin.

 

Revenue from products and services amounted to 31.6 billion baht in Q3, increasing by 87.3 per cent year on year (yoy) on the back of higher revenue from natural rubber.

 

Natural rubber accounted for 79.7 per cent (25.2 billion baht) of total revenue for Q3, growing 106.1 per cent from the same period a year ago. The increase was driven by sales volume that grew 53.1 per cent and average selling price that rose 29.1 per cent yoy, respectively.

 

Results were mixed on the gloves front. Sales volume was up 26.3 per cent yoy, reflecting a positive trend in demand. But the rapidly appreciating Thai baht, which went up by 5.2 per cent against the US dollar, meant that the average selling price in baht had declined by 3.2 per cent as compared to the previous quarter, said the company.

 

For the nine months, net profit was 816 million baht, an improvement over a net loss of 12.3 million baht during the same period of the previous year. Revenue hit 81.1 billion baht, a 29.7 per cent increase yoy from the 62.5 million baht in 9M 2023.

 

Looking ahead, the company said demand for natural rubber has improved compared with the same period in 2023 but noted that prices have been volatile. The proposal to delay the implementation of the EUDR by one year has caused uncertainty to the pricing for its rubber types.

Q2 revenue rises 13.9% to 5.7 billion baht

GLOVE manufacturer Sri Trang Gloves (Thailand) : STG 0% reported earnings of 378.4 million baht (S$14.2 million) for the three months ended Jun 30, a jump of more than 20 times from the 15.2 million baht booked in the previous corresponding period.

 

On a per-share basis, earnings per share rose to 0.13 baht, from 0.01 baht the year before.

 

The improved earnings come as revenue rose 13.9 per cent to 5.7 billion baht over the same period, from five billion baht the year before.

 

On Wednesday (Aug 14), the company noted that sales volume rose 10 per cent on the year to 8.4 billion pieces. This was driven by latex-powdered gloves and nitrile gloves, the sales of which rose 13.3 per cent and 34.3 per cent on the year, respectively.

 

While sales volume across all products fell on a quarterly basis due to seaport congestion and higher freight rates, Sri Trang Gloves said the global demand for gloves has recovered and is growing at its usual pace.

 

The rise in demand comes as the inventories of major distributors across all regions have returned to normal levels, added the company.

 

Meanwhile, average selling prices for the second quarter rose 1.3 per cent on the year to 676 baht per 1,000 pieces, following a rise in costs of raw materials.

 

&ldquo The baht depreciated 2.9 per cent quarter on quarter against the US dollar,&rdquo said Sri Trang Gloves. &ldquo However, price competition remains as the global glove industry is gradually shaking off the oversupply.&rdquo

 

Gross profit for the quarter rose 48.3 per cent on the year to 773.6 million baht, mainly because the rise in average selling prices offset higher raw material costs.

 

For the first half of the fiscal year, net profit rose 256 per cent on the year to 525.2 million baht, from 147.5 million baht previously. Revenue grew by 22.5 per cent to 11.8 billion baht in H1 FY2024, from 9.6 billion baht in the previous corresponding period.

 

The company said that, with its unique product mix, it can alternate between producing latex powder-free gloves and nitrile gloves.

 

It added that it will continue to undertake cost-saving initiatives, such as the use of automation and technology, to achieve economies of scale and improve efficiency to create higher profit and returns to shareholders.

RUBBER company Sri Trang Agro-Industry (STA) : NC2 -8.94% on Thursday (Aug 10) posted earnings of 110 million baht (S$4.2 million) for the second quarter ended Jun 30, down 90.4 per cent from earnings of 1.1 billion baht in the corresponding period last year.

 

Revenue sank 24.1 per cent year on year to 21.2 billion baht in Q2 &ndash fuelled by a 23.9 per cent decline in revenue from natural rubber to 17.7 million baht due to a lower average selling price (ASP). 

 

Sales volume of the natural rubber products segment &ndash comprising technically specified rubber, ribbed smoked sheet and concentrated latex &ndash also fell in that period as STA &ldquo faced difficulty in sourcing raw materials as a result of El Nino, which caused a prolonged wintering period in all regions of Thailand&rdquo , said the group in a bourse filing. 

 

The natural rubber industry remains &ldquo weighed down by a slowdown in demand&rdquo as tire producers are still left with a high level of inventory, added STA. 

 

Meanwhile, revenue from gloves, which accounted for 22.6 per cent of total revenue, decreased 25.2 per cent year on year to 4.8 million baht on a lower ASP, even as sales volume grew. 

 

Moving forward, STA highlighted that natural rubber prices for the rest of 2023 will be heavily influenced by demand from tire producers and their level of inventory, as well as macroeconomic uncertainties.