Hartalega to boost capacity by 15% to 20% in 3 years

With latest plant coming in, the firm is expected to add RM250m of capex for its NGC project

By FARA AISYAH / Pic By ISMAIL CHE RUS

Hartalega Holdings Bhd has targeted to increase its annual production by 15% to 20% in the next three years, once its remaining three Next Generation Integrated Glove Manufacturing Complex (NGC) plants begin operation.

Hartalega MD Kuan Mun Leong said the company aims to produce some 32 billion pieces of gloves for the financial year 2019 (FY19).

The premium latex glove manufacturer has produced about 27 billion pieces of gloves for the financial year ending Mar 31, 2018 (FY18).

“The initial plan that we have communicated for the NGC is to build six factories, but it has now changed — we are going to build seven factories in total.

“Plant 7 has a designed capacity of 2.6 billion pieces of gloves, compared to the other six plants which have a design capacity of 4.7 billion pieces per plant,” Mun Leong told reporters at Hartalega’s EGM in Kuala Lumpur yesterday.

With the latest plant coming in, the company is expected to add another RM250 million capital expenditure (capex) for its RM2.2 billion NGC project.

Mun Leong said with only 10 production lines, the new plant is tailored for smaller run orders, including specialty products.

Plant 7 is slated to begin construction between June and July this year, and targeted to run its first line in March 2019.

The construction for Plant 6 is ongoing with expected operational date between February and March next year.

Meanwhile, the first line of Plant 5 is aimed to set off in June this year. All of its 12 lines are targeted to complete in January next year.

Mun Leong added that despite a very aggressive expansion plan that Hartalega has in the pipeline, the company will ensure that supply and demand in the industry is at a healthy level.

He said the commissions of new production lines and constructions of new plants are highly depending on the market sentiments.

“We will slow down if supply is slightly ahead of demand in the market,” Mun Leong added.

As such, he does not expect an oversupply situation in the market for the next three years.

Although the listed company is expanding, it is not planning for any merger and acquisition (M&A) exercise any time soon.

Hartalega executive chairman Kuan Kam Hon said the group is planning to grow its distributions instead.

“We are not focusing on M&A, but more on organic growth. We are trying to grow our subsidiaries that are handling the distributions of our products.

“No M&A has been identified at the moment, so we just want to capitalise on the opportunities that are available to us now,” Kam Hon added.