KUALA LUMPUR: Hartalega Holdings Bhd's net profit surged 133.59 per cent to RM219.71 million in the first quarter (Q1) ended June 30, 2020 from RM94.06 million a year ago.
In a filing to Bursa Malaysia today, the glove manufacturer said this was due to higher sales revenue, lower raw material and energy cost coupled with its cost control initiative to reduce operation costs for the current quarter.
Its revenue increased 43.7 per cent to RM920.09 million from RM640.1 million on higher sales volume of 38.5 per cent and average selling price (ASP).
Hartalega said in line with growing rubber glove demand globally, the group would continue with its Next Generation Complex (NGC) capacity expansion plans.
Plant 6 of NGC facility has commissioned eight out of 12 lines with remaining production lines to come on steam progressively.
Plant 6 will have an annual installed capacity of 4.7 billion pieces once completed.
Plant 7 is also in the expansion pipeline catering to small orders focusing more on specialty products with an annual installed capacity of 2.7 billion pieces.
Hartalega said with the progressive commissioning of Plant 6 and 7, the group's annual installed capacity was expected to increase from the current 39 billion to 44 billion pieces by financial year 2022.
It said global demand for medical supplies such as gloves had surged due to the Covid-19 pandemic.
"With new cases continue to soar in the US, Latin America, India and other countries, the growing demand for gloves is expected to continue in the coming years.
"In addition, the sector is expected to undergo a structural step-up in demand on the back of increased glove usage from emerging markets with low gloves consumption per capita and heightened hygiene awareness.
"The overall projected growth in demand is expected to outstrip supply for the next few years," it said.
Hartalega said to ensure the group continues to deliver gloves to front liners globally without disruption, it will continue to enforce the Covid-19 preventive measures that were put in place to minimise the risk of infection within the operations in Malaysia.
"These include enforcing social distancing measures, awareness programme, entry screening procedure, installing thermal scanners at high traffic locations, staggered shift hours and frequent sanitising at common areas," it said.
In March, the group entered into an agreement for the acquisition of a piece of land in Banting, Selangor for RM263 million.
The land which measures 95 acres will serve as the future site for NGC 2.0 capacity expansion plan.
"The acquisition will enable the group to progressively expand its capacity to meet the rising global demand.
"Moving forward, the group remains optimistic of the longer term prospects underpinned by growing demand for rubber gloves and ongoing expansion plans," it said.