Hartalega Q4 profit dragged down by strong ringgit

PETALING JAYA: Nitrile glove manufacturer Hartalega Holdings Bhd recorded a 21.7% decline in net profit for the fourth quarter ended March 31 from RM116.65 million a year ago, due to the inability to pass the rapid rising cost arising from the strengthening of the ringgit within a short period of time.

Despite the drop in earnings, the group recorded RM683.89 million in revenue, 10.9% higher than the RM616.84 million recorded in the corresponding quarter of the previous year, attributed to the growth in sales volume.

Apart from that higher labour cost, electricity and lower gain from foreign exchange also affected the results for the quarter.

As for the overall , Hartalega’s net profit rose 3.9% to RM456.2 million from RM438.92 million in the previous year, while revenue soared 17.6% to RM2.83 billion from RM2.41 billion.

The group told Bursa that the growth in sales revenue was contributed by improvement in sales volume of 10.1% in tandem with growing demand for nitrile gloves and continuous expansion in improving production capacity.

Currently, Hartalega will continue with its NGC capacity expansion plan and the increasing contribution of NGC to sales revenue will contribute further to the group’s earnings.

The group is also working on securing Federal Drug Administration (FDA) approval for US market where there is greater awareness among US healthcare professionals on the dangers of healthcare-associated infections.

“Furthermore, due to ongoing commissioning of new capacity within the industry, capacity growth is currently ahead of demand growth.”

Hartalega believes the new capacity will gradually be taken up in the coming quarters as industry players regulate expansion and market demand for rubber gloves continues to grow globally.

Its has also embarked on various cost optimisation and automation initiatives to mitigate potential margin pressure.

“Moving forward, Hartalega remains optimistic of the longer term prospects underpinned by growing demand for rubber gloves, ongoing NGC expansion and potential growth of antimicrobial gloves .”

Source: The Sun Daily

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