PETALING JAYA: Rubber glove manufacturer Hartalega Holdings Bhd recorded a lower net profit of RM88.28 million for its first quarter ended June 30, 2022 (Q1’23), down from RM2.26 billion in the previous year’s corresponding quarter (Q1’22), as revenue fell significantly due to normalising of average selling price (ASP) and decrease in sales demand.
Its revenue in Q1’23 decreased 78.3% to RM845.67 million from RM3.9 billion in Q1’22, mainly due to the normalising of ASP and a 28% drop in sales volume, compared with Q1’22 when both ASP and sales demand hit record highs at a critical time during the Covid-19 outbreak.
In a Bursa Malaysia filing, Hartalega said that in the first half of 2022, there were signs of recovery in the manufacturing sector in Malaysia as the country transitioned to the endemic stage of the Covid-19 outbreak with the reopening of markets and borders.
Moving ahead, the company expects headwinds to remain because of the continuing Russia-Ukraine conflict as well as the ongoing lockdowns in certain major cities in China, which have caused further strain on global supply chains, leading to higher commodity and raw material prices.
It stated that no dividend was proposed or declared for the current quarter under review.
Separately, Hartalega CEO Kuan Mun Leong said the Q1 results reflect the normalising of ASP and demand, and were also impacted by higher operating costs, rising inflationary pressure due to the higher electricity and natural gas tariffs, as well as the new minimum wage policy.
“In addition, heightened market competition was further intensified by the ongoing oversupply situation in the global glove sector,” he said.
“In the short term, external headwinds are expected to persist due to higher commodity and raw material prices caused by disruptions to the global supply chain. Nevertheless, the Group remains focused on strengthening long-term prospects. Hartalega has a strong track record spanning more than three decades and we continue to prudently build capacity and capabilities for the future.
“To this end, we continue to progress with our latest expansion of the NGC 1.5. This will be completed in phases accordingly, conscious of prevailing market supply and demand conditions. Over the long run, the NGC 1.5 will enable us to cater to growing structural demand for gloves globally, particularly due to increasing glove usage in emerging markets with a low glove consumption base, as well as higher hygiene awareness among healthcare practitioners in the post-pandemic era.
“With these plans in place, we remain optimistic on longer-term prospects for the sector, given the expected continued post-pandemic growth in demand for rubber gloves. In tandem, we will continue to focus on cost optimisation and ramping up automation to enhance operational efficiency and sustainability,” Kuan said.
Earnings per share for the current quarter was 2.58 sen while net assets per share stood at RM1.49 as at June 30, 2022.
Hartalega closed two sen higher today at RM2.80 on a volume of 5.36 million shares.
Source: The Sun Daily
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