KUALA LUMPUR: Hartalega Holdings Bhd’s net profit for its third quarter ended December 2014 (3QFY15) was RM49.52 million, down 14.44% from RM57.88 million in 3QFY14. This gives it an earnings per share of 6.39 sen in 3QFY15 compared with 7.81 sen in 3QFY14.

Despite the marginally weaker earnings, Hartalega (fundamental: 3; valuation:0.3) still declared a second interim dividend of three sen per share for the quarter, payable on March 26.

According to the glovemaker’s filing with Bursa Malaysia yesterday, the weaker performance was due to start-up expenses of its Next Generation Integrated Glove Manufacturing Complex (NGC) project, which led to a lower profit margin, which reduced from 26.2% to 24.8%.

Revenue for 3QFY15 increased 7% to RM286.41 million from RM267.82 million a year ago, mainly driven by the weaker ringgit, which mitigated the effects of the lower average selling price due to declining raw material prices.

“Our results for this period are within expectations. External factors continue to put pressure on the glove industry, from lower average selling prices resulting from reduced raw material costs to competitive selling prices and increased electricity and natural gas costs; all of these have had an impact on the business,” Hartalega managing director Kuan Mun Leong said in a media statement yesterday.

For the cumulative nine-month period (9MFY15), the group’s net profit was RM154.76 million, down 15.92% from RM184.06 million in the same period last year, even as revenue rose 1.7% to RM840.85 million for 9MFY15 from RM826.79 million in 9MFY14.

“In January 2015, we commissioned the first two production lines of the NGC. Additional production lines will be coming onstream progressively and will significantly boost our manufacturing capabilities in the years ahead. Given the strong demand for nitrile gloves, this certainly sets the course for a bright future for the group,” Kuan said.

Hartalega fell three sen to close at RM7.55 yesterday,  giving it a market capitalisation of RM6.04 billion.

This article first appeared in The Edge Financial Daily, on February 11, 2015.