KUALA LUMPUR: Hartalega Holdings Bhd
said it faced a complex operating environment in its second financial quarter (2QFY25) as capacity expansion costs coupled with foreign exchange losses adversely impacted the short-term profitability of the group.
In a statement, CEO Kuan Mun Leong said the group had ramped up new production lines to meet anticipated future demand, which created temporary cost pressure.
Meanwhile, the US dollar fell abruptly against the ringgit, which impacted the group's short-term profitability.
Faced with these pressures, the group posted a net profit of RM8.63mil in 2QFY25, down from RM27.7mil in the previous corresponding quarter.
The group's earnings per share in 2QFY25 slid to 0.25 sen from 0.81 sen previously.
"While the ramping up of production activities improved operational efficiencies, this decline was mainly due to higher raw material costs and adverse foreign exchange fluctuations impacting bottomline, as the US dollar weakened significantly against the ringgit during the period," said the group.
However, Hartalega's revenue in 2QFY25 surged to RM652.07mil from RM452.09mil in the year-ago quarter due to a significant 52% increase in sales volume.
For the six months period to Sept 30, 2024 (1HFY25), Hartalega said net profit was RM40.55mil as compared to a net loss of RM24.77mil, while revenue in 1HFY25 rose to RM1.24bil from RM892.12mil in 1HFY24.
The board of directors declared a first interim dividend of 0.56 sen per share, with entitlement date on Nov 27, 2024, and payable on Dec 11, 2024.
Hartalega said in its filing with Bursa Malaysia that there are early signs of an improving demand trend as pandemic stockpiles worldwide continue to deplete and consumption begins to normalise.
"Moreover, capacity streamlining by key domestic producers and the exit of new entrants have alleviated some of the oversupply pressures," it said in its outlook.
Also positively, the recently announced higher tariffs on glove imports from China by the US Trade Representative which will come into effect in January 2025, could provide further impetus for Malaysian manufacturers to regain their footing in the US, being the world’s largest consumer market.
"The longer-term prospects for the rubber glove sector remain positive as the Group anticipates a return to and expansion beyond pre-pandemic levels of demand, driven by the essential role of rubber gloves in the global healthcare sector.
"This growth trajectory is further supported by an increasing awareness of hygiene practices and an expected rise in glove usage worldwide," said the group.
