Glove ASP, margin likely to normalise by 1Q22, but prices will remain above pre-Covid-19 levels — Hartalega CEO
KUALA LUMPUR (Sept 7): Hartalega Holdings Bhd sees the downtrend of its glove average selling price (ASP) continuing and expects prices to normalise in the first quarter of calendar year 2022 (1Q22).
In a virtual media briefing today, Hartalega chief executive officer (CEO) Kuan Mun Leong noted that the ASP started to ease in the April to June quarter and is expected to decline by 30% every quarter going forward until 1Q22.
However, Kuan believes the floor price of gloves will not return to pre-pandemic levels, owing to changes in the cost structure.
“We believe our ASP or rather our margin will be normalised by the first quarter of the next calendar year. The ASP will then be higher, meaning it will not be lower than pre-pandemic times, because the cost structure has actually changed for us. We are experiencing additional costs from social compliance and also the material cost seen today is actually higher.
“For example, nitrile gloves' raw material [cost] is still higher than pre-pandemic levels. So, the price should not be anything below US$35 [per thousand gloves]. Otherwise, this doesn't make sense in terms of margins,” he added.
At the time of writing today, Hartalega's share price had fallen four sen or 0.58% to RM6.87, giving it a market capitalisation of RM23.55 billion.
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