The company said that global oversupply of rubber gloves is expected to persist,
PETALING JAYA: Malaysia’s largest glove maker by market value slipped into operating losses again, dragged down by a drop in glove prices and lower sales volume.
Hartalega Holdings Bhd
, which reported an operating loss of RM7.8mil in the third quarter ended Dec 31, 2023, cautioned shareholders that pressure on average selling prices (ASPs) would remain.
It also said global oversupply of rubber gloves is expected to persist, even though some smaller players are exiting the sector.
In the preceding second quarter, Hartalega had recorded an operating profit of RM15.9mil.
Despite persisting challenges, Hartalega noted that it is not all doom and gloom for the glove business.
The capacity rationalisation exercises undertaken by certain key domestic manufacturers together have helped to relieve a certain degree of oversupply pressure in the market.
The glove maker also said recent demand has shown signs of improvement and is expected to normalise in the near future.
It foresees glove consumption to return to pre-pandemic levels and thereafter continue to grow over the long term with increased glove usage, especially from emerging markets that have a low glove consumption base.
“In anticipation of improved demand, the group is gearing up its capacity and resources,” stated Hartalega, which claims it owns the fastest production lines in the industry.
According to its website, the group can produce more than 45,000 gloves per hour.
Despite the operating loss in the third quarter ended Dec 31, 2023, Hartalega announced yesterday that it recorded a net profit of RM22.38mil in the same three-month period.
In the previous corresponding quarter, the glove maker made a net loss of RM31.91mil.
The improved performance was mainly due to lower raw material costs and utilities expenses, better production efficiency arising from higher capacity utilisation as well as cost savings from the operational rationalisation exercise.
The group also recorded higher interest income and a reversal of certain provisions no longer required during the quarter.
Revenue was down by 10% year-on-year (y-o-y) to RM415.64mil, primarily attributed to lower sales volume and ASPs.
Earnings per share for the third quarter were 0.66 sen. No dividend was declared.
For the nine months ended Dec 31, 2023 (9M24), Hartalega posted a lower revenue of RM1.31bil, a decrease of 30.9% y-o-y.
The drop in revenue was primarily attributed to notable lower sales volume, as the industry is still facing supply chain inventory adjustment coupled with a decrease in ASP.
The drop in revenue further led to the operating loss recorded for 9M24, albeit partially offset by lower raw material costs and operating expenses during the period.
Hartalega also benefited from a foreign exchange gain and higher interest income for the period under review.
However, the group registered a net loss of RM2.39mil for 9M24, as higher operating income and lower taxes paid were not sufficient to offset the drop in revenue.
In a statement, chief executive officer Kuan Mun Leong said the group will weather the tough conditions in the sector.
The glove maker will also improve operational efficiency and heighten best practices in terms of fiscal management.
“Our five-year strategic plan will be our blueprint during this challenging period and we are confident it will enable the group to emerge as a stronger and more resilient company, with an innovative and agile approach to drive us forward,” he said.
