Hartalega reported it first quarter results registering a higher revenue of RM584 million, an increase of RM144 million or 32.7% from the preceding year corresponding quarter (Q1FY24).
The group said the notable revenue improvement was mainly attributable to improved sales volume and a marginal increase in average selling prices (ASP) during the period. However, it noted revenue was partially impacted by shipment delays amid the ongoing global shipment constraints. The Group registered a profit before tax of RM41 million while PAT was RM31 million during the quarter as compared with a loss of RM52 million in Q1FY24.
The glove maker said pProfitability improved on the back of higher revenue during the quarter, as well as lower operating costs driven by improved production efficiencies with higher capacity utilisation.
It also noted that Q1FY24 results was impacted by a one-off provision for severance pay of RM 47 million following the announcement of the decommissioning of Bestari Jaya facilityThe rubber glove industry has faced a sharp downturn in the wake of the post pandemic pent-up demand surge, influenced by global overcapacity, excess stockpiling of inventory, and heightened competition among regional and domestic manufacturers.
As for outlook, Hartalega said despite the challenges, there are early signs of improving demand for rubber gloves, driven by a gradual recovery in sales orders as pandemic stockpiles diminish. Moreover, actions taken by key domestic producers to streamline capacity and the exit of new entrants have alleviated some of the oversupply pressures. Consequently, the Group continues to ramp up production capacity in anticipation of a more favourable demand environment.
However, it does note on the headwinds that persist for the sector due to global oversupply, which is expected to continue exerting pressure on average selling prices as the market adjusts towards equilibrium. Additionally, the sector is facing ongoing shipping constraints arising from the Red Sea Crisis that have disrupted established trade routes causing shipment delays.
The longer-term prospects for the rubber glove sector remain intact as the Group foresees a return to, and expansion beyond, pre-pandemic levels of demand, driven by the fact that gloves are essential for the healthcare sector.