Hartalega expands capacity as 2Q earnings soar

The pandemic continues to drive heightened global demand for medical supplies, including gloves which are critical PPE


HARTALEGA Holdings Bhd projects demand for gloves will continue to grow against the backdrop of the Covid-19 pandemic, outstripping supply over the next few years.

Its CEO Kuan Mun Leong (picture) said the Covid-19 pandemic continues to drive heightened global demand for medical supplies, including gloves which are critical personal protective equipment (PPE).

“In addition to the recent third wave in Malaysia, cases are unfortunately soaring in the US, India, Latin America and Europe.

“Hence, the glove sector is experiencing a structural step-up in demand stemming from increased glove usage due to change in users’ behaviour and increased hygiene awareness,” he said in a statement yesterday.

He added that to ensure the group is well-prepared to cater to demand growth, its expansion plans have already been accelerated.

With that, he noted that the group will continue with its Next Generation Integrated Glove Manufacturing Complex (NGC) capacity expansion plans.

“To this end, this month we marked a critical milestone with the completion of Plant 6 of our NGC.

“We are pleased that our operational efficiencies and project management capabilities were able to bring Plant 6 fully on-stream one year ahead of schedule,” he added.

Moving forward, Kuan said Plant 7, which caters to specialty products, is in the expansion pipeline and will add an annual installed capacity of 2.7 billion pieces.

He highlighted that the glovemaker will embark on the construction of Plants 8 to 11 on a plot of land acquired adjacent to the NGC, which will increase its installed capacity with the addition of 19 billion pieces per annum once completed.

“Our longer-term expansion will be driven by NGC 2.0, with the first production line targeted to be commissioned in the calendar year 2022.

“Looking ahead, the group remains optimistic of prospects for the years to come, underpinned by growing demand for rubber gloves and our strategic expansion plans,” Kuan noted.

He added that the group will continue to deliver gloves to frontliners globally without disruption and enforce Covid-19 preventive measures to minimise infection risks within its operations in Malaysia.

For the second quarter ended Sept 30, 2020, Hartalega’s net profit surged 424.5% year-on-year (YoY) to RM544.96 million as revenue soared by 89.7% YoY to RM1.35 billion, driven by higher average selling prices and capacity.

Earnings per share for the period was 15.95 sen.

Hartalega stated that its strong earnings were due to multiple aspects namely higher sales revenue, average selling price, lower material costs and better production efficiency.

For the cumulative six-month period for financial year 2021 (6MFY21), Hartalega’s earnings surged 286.34% YoY to RM764.68 million, while turnover increased 67.92% YoY to RM2.27 billion.

The board recommended a first interim dividend of 3.85 sen per share to be paid on Dec 18 this year, with an entitlement date of Dec 4, 2020.

This brings the total dividend payout for 6MFY21 to 5.95 sen per share, which is 2.25 sen higher than the 3.7 sen dividend paid in 6MFY20.

Hartalega’s share price ended 3.39% or 60 sen higher at RM18.28 yesterday, bringing its market capitalisation to RM62.66 billion.