Hartalega expects better showing in H2

KUALA LUMPUR: Hartalega Holdings Bhd expects a better financial performance for the second half of its financial year ending March 31, 2017, in line with its cost-optimising exercise and growing demand of gloves, especially nitrile gloves.

Managing director Kuan Mun Leong said among the cost-optimisation measures undertaken were reducing material wastage and trimming 600 workers from its workforce.

"We are not affected by the minimum wage hike and, at the same time, we are also not affected by the freeze in foreign workers as we managed to trim our headcount.

"As for our energy cost, we reviewed our production line design to make it more efficient in terms of energy consumption," he told reporters after the group's AGM in Kuala Lumpur on Tuesday.

The glove manufacturer had allocated RM400 million for its Plant 3 and Plant 4 at its Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang.

The quantum was part of the RM2.2 billion NGC project, which will substantially boost Hartalega's annual capacity from 16 billion to 42 billion pieces progressively. 

Kuan said the first two plants in the NGC were already fully operational.

The group expects Plant 3 to start commercial production in October this year, he added.

"We delayed Plant 3 and Plant 4 because we want to better regulate the expansion to the market growth. We do not want to put out huge capacity and in return it works against us and drives the glove prices down," he said.

The group's net profit in the first quarter ended June 30, 2016, declined 10.4% to RM56.18 million from RM62.68 million a year ago due to more competitive pricing, as well as increased raw material, natural gas, maintenance and staff costs.

Revenue, however, was up 25.4% to RM401.83 million compared with RM320.52 million in the previous corresponding quarter, contributed by the group's continuous expansion of production capacity, increase in demand, as well as the strengthening of the US dollar. - Bernama