Aspen to significantly scale down glove business as Covid-19 pandemic eases

Aspen said it is currently evaluating various options on the future directions of the glove-making unit. PHOTO: WWW.ASPENGLOVE.COM.MY

SINGAPORE (THE BUSINESS TIMES) - Aspen Glove, the glove-making unit of mainboard-listed Aspen (Group) Holdings, is planning to significantly scale down its operations, the group said on Wednesday night (June 8).

This comes amid increasing headwinds for the medical glove market, and as the glove maker expects further margin compressions from falling average selling prices and rising production costs.

Aspen noted that the medical glove market is facing reduced demand amid the easing of Covid-19, high inventory levels, heightened competition, global supply chain challenges, higher shipping and logistic costs, high inflation, and a continuous decline in average selling prices.

The glove maker was also unable to secure any significant new purchase orders from its existing or new customers as glove buyers have refrained from stocking up on gloves to avoid locking in purchases at high prices.

It also noted that geopolitical tensions and risks of a global economic recession from the ongoing Russia-Ukraine conflict.

Aspen said it is currently evaluating various options on the future directions of the glove-making unit, including recapitalisation, entering into a joint venture and/or disposal of the entire business and assets.

In the meantime, it will continue to focus on its property development segment and food and beverage segment, which it said are showing signs of recovery as countries move towards an endemic management of Covid-19.

Aspen, however, warned that the recovery of these sectors may be weighed down by persistent supply chain disruptions, rising inflation and fears over a global economic recession.

The group expects the scale-down to a material impact on its results in the current financial year ending June 30.

Shares of Aspen closed flat at six cents on Wednesday, before the announcement.

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