HARTA 5168 HARTALEGA HOLDINGS BERHAD's Q2 earnings hit by lower glove prices and sales volume

 HARTA 5168 HARTALEGA HOLDINGS BERHAD's Q2 earnings hit by lower glove prices and sales volume

The company noted that rising energy costs such as increase in natural gas tariffs as well as the introduction of minimum wage policy had further affected its performance.

KUALA LUMPUR: Hartalega Holdings Bhd's net profit dropped 96.9 per cent year-on-year (YoY) to RM28.34 million for the second quarter (Q2) ended Sept 30, 2022 (FY23) from RM914 million a year go on the back of lower revenue and higher energy costs.

Its revenue dropped 70.9 per cent to RM584.56 million from RM2.01 billion, dragged down by lower average selling price (ASP) caused by an oversupply situation given the intense market competition.

The decline was also due to the decrease in sales volume by 27 per cent compared to Q2FY22, Hartalega said in a statement today.

The company noted that rising energy costs such as increase in natural gas tariffs as well as the introduction of minimum wage policy had further affected its performance.

For the six-month period, the company's net profit dropped 96.3 per cent to RM116.62 million from RM3.17 billion last year due to higher operating costs.

Group revenue declined to RM1.43 billion, down 75.8 per cent YoY from RM5.91 billion a year earlier.

Hartalega chief executive officer Kuan Mun Leong said it was not spared from the current global oversupply.

"However, we are confident that we will pull through and punch above these significant market challenges as the capacity rationalisation continues and move towards equilibrium.

"In view of this, we have taken a strategic approach to align our Next Generation Integrated Glove Manufacturing Complex (NGC) 1.5 expansion plan with the current market supply and demand dynamics," Kuan said in the statement.

The company is continuing its efforts in reinforcing its competitive advantages which includes ramping up automation to maximise productivity as well as to achieve energy and cost optimisation.

Despite the current pent-up inventory and heightened competition in the industry, Kuan said the company remained positive on the long-term prospects as global glove usage was expected to rise in emerging markets with a low glove consumption base.

"Heightened hygiene and health awareness among health practitioners will also drive demand and volume growth of gloves in the long run. Going forward, we remain optimistic on longer-term prospects for the sector.

"We hope for the continued conducive environment and business-friendly policies in Malaysia in order for this important sector to remain competitive against heightened competition from other nations," he added.

https://www.nst.com.my/business/2022/11/848283/hartalegas-q2-earnings-hit-lower-glove-prices-and-sales-volume