KUALA LUMPUR (May 9): Dragged by a RM347 million one-off impairment loss from the decommissioning of its Bestari Jaya production facility, Hartalega Holdings Bhd sank into the red for the financial year ended March 31, 2023 (FY2023) with a net loss of RM218.04 million versus a net profit of RM3.23 billion a year earlier.
According to Hartalega’s Bursa Malaysia filing on Tuesday (May 9), the glovemaker was also weighed down by a 69.48% fall in full-year revenue to RM2.41 billion in FY2023 as compared to RM7.89 billion in FY2022, due to lower average selling prices (ASPs), sales volume amid the continued oversupply situation and supply chain inventory adjustments.
Hartalega noted that barring the impairment loss, the group achieved a full-year net profit of RM126 million for FY2023. It is worth noting that the decommissioning of the Bestari Jaya facility, which has been operational since 2004, is expected to be completed by end-2023.
For the fourth quarter ended March 31, 2023 (4QFY2023), Hartalega posted a larger net loss of RM302.76 million versus RM198.15 million a year ago due to the aforementioned one-off impairment loss.
Losses per share expanded to 8.86 sen from 5.80 sen previously. The larger net loss was also due to lower production utilisation as well as higher operating costs such as energy and labour costs.
Revenue for the quarter tumbled 46.76% to RM515.74 million from RM968.69 million a year prior. Against its gross profit of RM15.22 million, the group recorded a gross margin of 2.95%.
In a separate statement, Hartalega chief executive officer Kuan Mun Leong said that in the face of the glove sector’s “enormous and unprecedented challenges”, the group cannot sit idle and will embark on a five-year strategic plan to ensure long-term business sustainability — which began with the Bestari Jaya facility’s decommissioning.
“While capacity rationalisation within the sector is expected to continue, the hurdles facing the sector are likely to persist in the short to medium term,” Kuan said, adding that in addition to the market imbalance, glove manufacturers are also contending with a higher operating cost environment, with heightened pressure on operating margins.
However, he said consolidating the group’s operations at its Next Generation Integrated Manufacturing Complex (NGC) in Sepang will improve its operational efficiencies and overall competitiveness moving forward.
“Leveraging the NGC’s advanced technologies and manufacturing processes, we will be well-positioned to cater to long-term demand growth when we pass through this difficult period,” he added.
Looking ahead, Kuan said the group is focused on implementing prudent cost optimisation measures, strengthening operational efficiencies and scaling up automation.
“Underpinning our growth strategy is our commitment to our environmental, social and governance (ESG) agenda to propel the group forward in our journey of sustainable growth,” he added.
At noon break on Tuesday, Hartalega shares were three sen or 1.6% lower at RM1.84, giving the group a market capitalisation of RM6.31 billion.