Hartalega unaffected by hike in raw materials

KUALA LUMPUR: Synthetic glove manufacturer Hartalega Holdings Bhd is optimistic about the current financial year ending March 31, 2009 as it has been able to strengthen its margins and offset the rising fuel prices via biomass fuel.

Executive chairman and managing director Kuan Kam Hon said on Thursday that despite increasing raw materials prices, energy cost and global conditions, he was still optimistic about its financial performance for the remaining quarters of the year.

“Moreover, the group has in place a state-of-the-art biomass plant which will help mitigate the rise in energy costs as it reduces reliance on natural gas. During the recent gas price hike of almost 75%, the biomass plant was able to reduce the impact,” he said.

Currently, 26% of the group’s current energy need is from biomass fuel. The biomass plant uses mainly empty fruit bunch fibers as fuel.

He said this would otherwise be impossible in conventional energy plants due to the absence of advanced combustion technology.

Kuan said the biomass plant was also registered with the Kyoto Protocol and would allow the group to trade certified emission reduction credits (CERs) to developed nations in future.

Hartalega had already signed a sale and purchase agreement with EDF Trading Ltd, a major player in energy trading based in London and a unit of the largest power utility group in Europe, The EDF Group.

“At this moment, the biomass plant is at the validation stage but once the process is completed, we will be able to potentially generate income of up to RM12 million within the next four years,” he said.

For the first quarter ended June 30, Hartalega recorded net ptofit of RM12.89mil on the back of a turnover of RM87.83mil.

For the financial year ended March 31, 2008, it posted net profit of RM70.25mil on the back of RM257.58mil in revenue.

Kuan said the group’s positive financial performance was based on its intensive research and development efforts that enabled it to develop advanced manufacturing processes.

“As a result, we are still able to deliver margins which are above industry average despite challenging market conditions,” he said.

“More importantly, we have been able to strengthen our margins while still providing our large international client base with attractive and competitive pricing.

"Additionally, our synthetic gloves have been making great headway with us gaining enormous market recognition in Europe while we maintain a strong position in the US.”