Hartalega 1Q net profit up 30% on higher sales

Hartalega 1Q net profit up 30% on higher sales
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KUALA LUMPUR (Aug 7): Hartalega Holdings Bhd's net profit rose 29.6% to RM124.87 million in the first financial quarter ended June 30, 2018 (1QFY19) from RM96.39 million a year ago, driven by higher sales achieved with favourable demand and additional production capacity.

Lower costs of nitrile, chemical and upkeep of plant and machinery have also contributed to the higher profit, it added.

This resulted in a higher earnings per share of 3.77 sen for 1QFY19 compared with 2.93 sen for 1QFY18.

Quarterly revenue also increased 17.5% to RM706.35 million from RM601.04 million a year ago in tandem with growing demands for nitrile gloves and continuous expansion in improving production capacity, with improved sales volume of 20.5%.

On July 3, Hartalega had proposed a final dividend of 2.2 sen per share for the financial year ended March 31, 2018 (FY18), which is subject to the approval of the shareholders at the forthcoming annual general meeting scheduled on Aug 24.

In a filing with Bursa Malaysia today, Hartalega said prospects for the rubber glove manufacturing sector remain strong with increasing demand arising from switching trends towards nitrile glove.

"Nitrile glove now accounts for 60% of Malaysian rubber glove export. In meeting the rising demand, Hartalega Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang has begun commissioning Plant 5 in August, with construction of Plant 6 to follow.

"Plant 5 and Plant 6 will each have annual installed capacity of 4.7 billion pieces," it added.

Hartalega noted that a new plant — Plant 7 — which is also in the expansion pipeline, will tailor to small orders and focus more on specialty products.

"Plant 7 will have an annual installed capacity of 2.6 billion pieces. The increasing contribution of NGC to group sales revenues would help to consolidate margins and contribute further to group earnings," it said.

Hartalega has launched its antimicrobial gloves in the UK on May 31 and has commenced taking orders.

Hartalega said it is also working on securing Federal Drug Administration approval for the US market. "The antimicrobial gloves will be priced competitively to encourage better take up," it added.

Hartalega shares closed three sen or 0.49% higher at RM6.17 today, valuing the group at RM20.39 billion.