Hartalega’s 4Q earnings surge 868% to RM1.1b

The increase is driven by higher sales revenue and better production efficiency despite higher raw material price

by NUR HAZIQAH A MALEK / Pic by BERNAMA

HARTALEGA Holdings Bhd’s move to lower utilities and upkeep expenses while increased sales and higher average selling prices (ASP) enabled the glovemaker’s net profit to jump 868% year-on-year (YoY) to RM1.12 billion for the fourth quarter ended March 31, 2021 (4Q21).

Earning per share for the quarter amounted to 32.75 sen with the company declaring an interim dividend of 17.7 sen.

Investors took profit on the stock with Hartalega shares closing five sen lower at RM9.93 yesterday.

Hartalega’s revenue for the period rose 196% YoY to RM2.3 billion on higher ASP.

The glovemaker’s full-year net profit amounted to RM2.89 billion or 84.5 sen earnings per share (EPS) compared to earnings of RM434.8 million or 12.93 sen EPS the year earlier, driven by higher sales revenue and better production efficiency despite higher raw material price.

Dividend for the full year was 33.3 sen as revenue for the financial year rose to RM6.7 billion from RM2.92 billion in FY20 on higher ASP and volume of gloves.

Hartalega, in its exchange filing yesterday, noted it will continue to expand its capacity in line with the growing demand for rubber gloves in the global market.

“To date, six out of 10 lines in Plant 7 have been commissioned, and upon full commissioning, Plant 7 will have an annual installed capacity of 2.7 billion pieces.

“Construction for the upcoming expansion, Hartalega NGC 1.5, is currently underway and the group targets to commission the first line by December 2021,” it said.

The expansion plans include four additional production plans which will contribute 19 billion pieces to the annual installed capacity, and spells an expected increase in capacity to 63 billion pieces over the next two to three years.

Hartalega, noted demand for medical supplies is expected to remain elevated in the immediate term due to several countries facing new Covid-19 outbreaks.

“Post-pandemic, 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.

“To ensure the group continues to deliver gloves to frontliners globally without disruption, the group will continue to enforce Covid-19 preventive measures that were put in place to minimise the risk of infection within the operations in Malaysia,” Hartalega stated.

The measures include implementing green barrier strategy, social distancing, awareness programme, entry screening, thermal scanners at high traffic locations, staggered shift hours and frequent sanitising.

To aid the nation’s fight against the pandemic, the group has fulfilled its pledge to contribute RM90 million to the government’s Covid-19 fund in February, it said.

In addition, Hartalega is buying 101.17ha of land in Bukit Kayu Hitam, Kedah, and intends to invest some RM7 billion to build 16 new manufacturing facilities over the next 20 years.

This is in addition to its investment in Sepang and Banting in Selangor which is expected to enable the group’s growth plans to 95 billion pieces by 2027.

The group is optimistic of the longer-term prospects underpinned by rubber gloves, increased demand and ongoing expansion plans.