The Good And Bad That Investors Should Know About Riverstone Holdings Limited’s 2017 Third Quarter Earnings

Riverstone Holdings Limited (SGX: AP4) is a Malaysia-based company that produces nitrile gloves for both the cleanroom and healthcare industries.

Last week, Riverstone reported its 2017 third quarter earnings. There are both positive and negative takeaways that investors may want to learn about. But first, let’s run through the company’s numbers.

The results

Here’s a condensed income statement for Riverstone for the third quarter of 2017:

Source: Riverstone 2017 third quarter earnings press release

It was a strong performance, with double-digit growth in both revenue and profit. Riverstone cited  higher demand for its revenue growth, and attributed the stronger bottom-line growth to a better sales mix and lower cost of raw materials.

The positives

Firstly, Riverstone achieved double-digit revenue growth despite having to face a competitive environment and lower average selling prices for gloves.

Secondly, the company’s gross profit margin expanded from 26.1% a year ago to 27.1% due to lower material costs and an improved product mix.

Thirdly, Riverstone continued to maintain a strong balance sheet – as of 30 September 2017, the gloves maker had a net cash position of RM 112.4 million despite its continuous spending in capital expansion.

Lastly, the expansion plan of the company is on track, and Riverstone expects to increase its total production capacity from 6.2 billion gloves at end-2016 to 7.6 billion gloves at end-2017.

The negative

The overall tune in Riverstone’s latest earnings was positive, but there’s  one negative point to pay attention to, which is the company’s volatile operating environment.

Riverstone has to contend with volatility in raw material prices, high levels of competition, and currency fluctuations. All or some of these factors could impact Riverstone’s revenue and costs.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation for Riverstone.