KUALA LUMPUR: The oversupply in the glove market has been alleviated to a certain degree amid capacity rationalisation across key domestic manufacturers and the exit of some smaller players, said Hartalega Holdings Bhd CEO Kuan Mun Leong.
Nevertheless, Kuan expects headwinds in the glove sector to persist in the second half of the financial year as the industry remains impacted by the ongoing global oversupply and intense competition, which has put downward pressure on average selling prices (ASP).
In the quarter ended Sept 30, 2023, Hartalega posted a net profit of RM27.7mil, which was on a par with net profit of RM28.34mil in the same quarter in the previous year.
The group's earnings per share was 0.81 sen compared to 0.83 sen previously.
Revenue, meanwhile, declined to RM452.09mil from RM584.56mil in the previous corresponding quarter due to lower sales volume and ASPs.
Over the six months period to Sept 30, 2023, Hartalega recorded a net loss of RM24.77mil, as compared to a net profit of RM116.62mil in the previous comparative period, while revenue shrank to RM892.12mil from RM1.43bil as sales volumes and ASP narrowed.
Excluding the one-off provision for severance pay of RM47mil for the decommissioning of its Bestari Jaya facility recognised in the first quarter of FY24, the group would have recorded a pre-tax profit of RM38mil for its first six months, compared with RM171mil in the same period last year, said Kuan in a statement announcing the group's results.
He said the decommissioning of the Bestari Jaya facility and consolidation of operations at the group's Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang is expected to generate improved operational and cost efficiencies once completed by the first quarter of 2024.
"Alongside this, we remain focused on prudent cost management, driving continuous operational efficiencies and scaling up automation.
"Advancing our environmental, social and governance (ESG) agenda is also paramount in enabling us to maintain our leading position in the sector and ensure the sustainable growth of the group,” said Kuan.