Hartalega’s 3Q earnings fall 74.6% on lower ASPs, sales

EPS for the period was 7.58 sen but Hartalega declared a 2nd interim dividend of 14.8 sen per share 


HARTALEGA Holdings Bhd earnings fell sharply in the third quarter ended Dec 31, 2021 (3Q22) due to weaker pricing power and lower demand for its nitrile gloves. 

Its net profit fell 74.6% year-on-year (YoY) to RM259.06 million in the quarter as revenue plunged 52.8% YoY to RM1.01 billion as average selling prices (ASPs) fell along with sales volume as the market saw an increased supply from major and new glove makers. 

Earnings per share (EPS) for the period was 7.58 sen but Hartalega declared a second interim dividend of 14.8 sen per share payable on March 9, 2022. 

Hartalega CEO Kuan Mun Leong (picture) said ASPs continued to see a decline from its peak in the first half of the financial year (1H22), arising from lower sales demand and increased supply from both major and new glove manufacturers. 

“In addition, buyers have also continued to adjust inventories as a result of the lower selling price. 

“The recent gazettement of the oneoff Prosperity Tax is expected to have a material impact on earnings in the final quarter of our current financial year,” he stated in a release yesterday. 

Kuan added the group continues to focus on its strategic long-term expansion plans to cater for the structural organic step-up in global demand for gloves, especially in emerging markets on the back of growing hygiene awareness. 

He said the group continues to expand its capacity driven by its Next Generation Integrated Glove Manufacturing Complex (NGC). 

In addition to the six plants that are fully completed at the NGC, eight out of nine lines of Plant 7 have been commissioned. 

Kuan said once fully commissioned, Plant 7 will have an annual installed capacity of 2.6 billion pieces. 

“The construction of our NGC 1.5 expansion is also currently underway, with the first line targeted to be commissioned by October 2022. 

“The NGC 1.5 expansion will house four production plants which will contribute 19 billion pieces to our annual installed capacity. 

“With the completion of NGC 1.5 in the next three to four years, the group’s annual installed capacity will increase to 63 billion pieces per annum,” he said. Kuan said Hartalega continues to progress in its strategic expansion plans and the group is confident its long-term prospects remain bright.

“Moving forward, the group will focus on improving efficiency and automation across its operations. 

“We remain optimistic about the longerterm prospects underpinned by growing demand for rubber gloves and ongoing expansion plans,” he noted. 

For the cumulative period of ninemonths ended Dec 31, 2021 (9MFY22), Hartalega’s net profit rose 94.3% YoY to RM3.43 billion, while revenue rose 57.4% YoY to RM6.92 billion. 

Hartalega shares closed 26 sen lower at RM5.57 yesterday on weaker quarterly earnings.