Sri Trang reports significant earnings growth on natural rubber performance
26 Nov 2024
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Thai group posts 53% year-on-year increase in NR volumes amid high demand for EUDR rubber
Bangkok – Thai natural rubber (NR) processor and gloves manufacturer Sri Trang has seen a significant increase in earnings (EBITDA) in the third quarter, driven by the performance of its NR operations.
Over the quarter ended 30 Sept, Sri Trang posted earnings of THB1.9 billion (€52 million), up 180% compared to the third quarter of 2023.
Sales were up 87% year-on-year at THB31.6 billion, buoyed by higher NR volume and average selling prices (ASP) driven by robust demand.
In particular, Sri Trang noted high demand for EU deforestation regulation EUDR-ready rubber, whose increased proportion contributed to a higher profit margin.
Demand from tire makers was robust for both non-EUDR and EUDR rubber, Sri Trang added
The gloves business, on the other hand, bore the brunt of the rapidly appreciating Thai Bhat, which impacted the ASP.
The high latex costs carried over from the second quarter also contributed to a lower profit margin.
Sri Trang, however, noted an increase in volumes, which it said reflected “a positive trend in demand” for gloves.
Breaking down segment performance, the NR business reported a 106% year-on-year growth in sales to THB25 billion, accounting for nearly 80% of total group revenue.
Volumes increased 53% year-on-year to 380,565 tonnes, with EUDR rubber contributing 16.5% of total sales at 62,755 tonnes.
Utilisation rate increased to 54.9% from 50.2% in the second quarter as production returned to normal following the end of wintering period.
Geographically, during the quarter, the portion of revenue from China was 53.4%, while Thailand and other countries in Asia contributed 14.3% and 14.2% of sales revenue, respectively.
The Americas and Europe made up 10.0% and 7.8% of sales revenue respectively.
In the gloves business, sales grew nearly 40% to THB6.4 billion, with volumes increasing 26% year-on-year.
The ASP in US dollar increased by 2.1% but the appreciation of Thai Bhat, which went up by 5.2% against the dollar, meant that the ASP in Bhat declined by 3.2% quarter-on-quarter.
Sales volume for gloves totalled 9.6 billion pieces, growing by 13.8% quarter-on-quarter and 26% year-on-year across all products and regions.
Sri Trang linked the growth to postponed shipments from the previous quarter due to "the seaport congestion during the Red Sea crisis.”
The crisis, it said, led to prolonged shipping times across many routes and rising freight rates, prompting some customers to delay shipments.
Gloves utilisation rate in the quarter was 77.1% and 81.8% over the first nine months of the year.
The nine-month rate, Sri Trang said, is up 20.1% from 61.7% reported during the first three quarters of 2023.
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