Hartalega’s Q2 net profit down 14% on lower selling price, higher cost

05 Nov 2019 / 20:51 H.

PETALING JAYA: Hartalega Holdings Bhd’s net profit slipped 13.6% to RM103.87 million for its second quarter ended Sept 30, 2019 compared to RM120.22 million in the same quarter a year ago, due to lower average selling price and higher packaging and natural gas cost.

Revenue for the period declined slightly by 0.7% to RM709.42 million from RM714.24 million.

The glove maker has proposed to declare an interim dividend of 1.8 sen per share for the quarter under review.

Hartalega’s first-half net profit also contracted 19.2% to RM197.93 million from RM245.09 million in the same period of the previous year. Its revenue stood at RM1.35 billion, a 5% decrease from RM1.42 billion reported previously.

Group managing director Kuan Mun Leong commented that despite the challenging operating environment, market demand has improved in the second half of the year.

He said Hartalega continues to see market acceptance for its world-first non-leaching antimicrobial gloves (AMG) launched in Shanghai, China recently.

“Plans are underway to introduce this product in other emerging markets and to secure approval from the Federal Drug Administration to enter the US market. Over the long-run, the AMG is expected to contribute positively to the group.”

“While tough market conditions may persist, Hartalega is positive on long-term prospects as we continue to build on our strong capabilities and proven track record to ensure sustainable growth.”

Hartalega will continue with its next generation integrated glove manufacturing complex (NGC), in tandem with the global growth rubber glove demand.

Plant 5 of NGC facility was fully commissioned during the quarter. The first line of Plant 6 is expected to begin commissioning in Q1 20 and will have an annual installed capacity of 4.7 billion pieces.

Meanwhile, Plant 7, which has commenced construction, will cater to small orders focusing more on specialty product and will have an annual installed capacity of 3.4 billion pieces.

With the expansion, Hartalega’s annual installed capacity is expected to increase from current 36.6 billion to 44.7 billion pieces by FY22.

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