Hartalega 3Q net profit up 6%; group pays 2.2 sen dividend

This article first appeared in The Edge Financial Daily, on February 13, 2019.
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KUALA LUMPUR: Hartalega Holdings Bhd, the world’s largest nitrile glove manufacturer, saw net profit rise 6% to RM119.76 million in the third financial quarter ended Dec 31, 2018 (3QFY19) from RM113.02 million a year ago, on stronger demand for nitrile gloves and a higher average selling price, coupled with sales volume growth of 9.6%.

This resulted in higher earnings per share of 3.6 sen for 3QFY19 compared with 3.43 sen for 3QFY18. Quarterly revenue also grew 19.9% to RM723.39 million from RM603.14 million a year ago.

The group also declared a second interim dividend of 2.2 sen per share for the financial year ending March 31, 2019 (FY19), payable on March 28.

For the cumulative nine months (9MFY19), Hartalega’s net profit rose 13% to RM364.84 million from RM322.75 million a year ago. Revenue was up 19.9% to RM2.14 billion from RM1.79 billion in 9MFY18.

Hartalega managing director Kuan Mun Leong expects the challenging business environment to persist, given heightening competition and cost increases such as the minimum wage hike, a higher natural gas tariff and additional costs associated with social compliance.

“We remain optimistic about the group’s long-term prospects. The first four plants at our Next Generation Integrated Glove Manufacturing Complex are fully operational and we have commissioned six out of 12 lines for Plant 5, with the remaining lines set to come on stream progressively,” he said.

“Meanwhile, the construction of Plant 6 is on track and the construction of Plant 7 is scheduled to commence in May this year.”

Kuan believes the group’s efficiency will continue improving as it embarks on building new plants, which will better position it against a competitive landscape.

“At the same time, our expansion plan is cognisant of maintaining a healthy balance in supply and demand,” he said. Nitrile gloves now account for 63% of Malaysian rubber glove exports.

“Additionally, following the launch of our latest innovation, the world’s first antimicrobial glove, we have received orders from clients in 10 countries to date. We expect to continue gaining momentum and see a strengthening market share as the market’s acceptance increases,” Kuan said.