Price rivalry, higher costs dent Hartalega’s Q1 results

PETALING JAYA: Nitrile glove manufacturer Hartalega Holdings Bhd saw its net profit in the first quarter ended June 30, 2016, decline 10.4% to RM56.18 million, from RM62.68 million a year ago, due to more competitive sales pricing, and increases in raw material, natural gas, maintenance and staff costs.
Revenue, however, was up 25.4% to RM401.83 million, compared with RM320.52 million in the previous corresponding quarter, contributed by the group’s continuous expansion in production capacity, increase in demand, as well as the strengthening of the US dollar.
Earnings per share for the quarter was 3.42 sen, while net assets per share was 93.26 sen.
“Given market conditions and economic headwinds, our results for this quarter are within our expectations. Factors such as greater price competition and rising operational and labour costs continue to persist, putting pressure on the glove manufacturing industry and impacting the group’s bottom line,” managing director Kuan Mun Leong said in a statement yesterday.
“Nonetheless, Hartalega remains resilient in the face of these challenges and we are firmly committed to the long-term sustainable growth of the group,” he added.
Kuan said the group has implemented cost management initiatives, combined with the greater economies of scale derived from the higher production capabilities at its next generation integrated glove manufacturing complex, which will further drive operational efficiencies.