Business

Thursday November 19, 2009

Kossan says shipments won’t be delayed despite fire incident

By YEOW POOI LING


PETALING JAYA: Kossan Rubber Industries Bhd does not expect any hiccup in meeting delivery deadlines following a second fire incident at its manufacturing premises in Jeram, Kuala Selangor.

The fire affected the front bay of the loading area as well as some shipment stocks, but these were insured, said an industry source, adding that for security procedures, plants close to the affected area would be temporarily halted.

“The interruption is minimal. No shipment will be delayed as it’s buffered by underutilised stocks in other plants,” he said.

In a filing with Bursa Malaysia on Tuesday, the glove maker said the affected premises housed nine glove production lines and ancillary processing equipment. In May, its storage, packing and off line production processing facility in Jeram caught fire.

Kossan’s share price was initially dampened by the announcement but ended at RM5.03, from an intraday low of RM4.88.

A report by AmResearch said based on management’s guidance, an estimated 2 to 2.5 million pieces of gloves was lost due to the fire.

“While this represents only 0.1% of the group’s annual total production output, our main concern lies in reduced production capacity going forward due to repairs to production lines at Plant C,” it said, adding that Plant C contributed 7% to 8% of Kossan’s installed annual capacity of 11.1 billion pieces of gloves.

Kossan’s KRI3 plant, which has 22 production lines, would be able to absorb existing orders in the immediate term as it has about 32% to 37% idle capacity, AmResearch said.

“We are maintaining our earnings forecast at this juncture pending further details from the damage assessment,” it said, noting that Kossan was due to release its third quarter results on Nov 24.


KOSSAN : [Stock Watch] [News]


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