KUALA LUMPUR: Hartalega Holdings Bhd registered a lower net profit of RM94.06 million in the first quarter (Q1) ended June 30, 2019.
The 24.7 per cent decreased from the RM124.87 million net profit posted a year ago, was mainly due to lower sales volume and higher packaging, electricity, heat and labour cost.
The glove maker’s revenue in the same quarter decreased 9.4 per cent to RM640.1 million from RM706.35 million.
“The lower sales revenue was mainly due to decrease in sales volume for the quarter,” it said.
Hartalega managing director Kuan Mun Leong said the results for Q1 were within the group’s expectations.
“Due to ongoing commissioning of new capacity within the industry, capacity growth is currently ahead of demand growth,” he said in a statement.
Hartalega is confident that the new capacity will gradually be taken up in the coming quarters as industry players regulate expansion and market demand for rubber gloves continues to grow globally.
“As such, we are optimistic that the second half of 2019 will improve in terms of more balanced market supply and demand dynamics.
“Overall, the glove industry is expected to remain in an expansionary mode. Hartalega is well-positioned to leverage on this as our Next Generation Integrated Glove Manufacturing Complex (NGC) progresses, with Plant 5 now fully commissioned,” he said.
Kuan said construction of Plant 6 was underway with Plant 7 in the pipeline.
He said with progressive commissioning of Plant 6 and 7, the group’s annual installed capacity was set to increase from the current 36.6 billion to 44.7 billion pieces per annum by financial year 2022.
Kuan said in light of rising operational costs such as the recent natural gas tariff hike, the group was focused on continuous cost optimisation initiatives to mitigate potential margin pressure.
“We are also intensifying our investment into Industry 4.0 and Internet of Things technologies to implement greater automation and AI solutions. This will enable us to further reduce dependency on manual labour and improve operational effectiveness,” he added.
Kuan said the group’s world-first antimicrobial glove (AMG) had seen growing market acceptance, securing orders from over 20 countries since the product was launched in 2018.
He said approval was pending from the Federal Drug Administration for the US market.
“As the product is now in the introductory and educational phase, we expect to build on our positive momentum and make further headway in the coming years.
“Looking ahead, we remain optimistic on long-term prospects for the group on the back of our strategic expansion plans via the NGC, growth opportunities for our game-changing AMG and strong focus on enhancing efficiencies throughout our operations,” he said.