KUALA LUMPUR (Nov 12): Hartalega Holdings Bhd (KL:HARTA), the world’s largest nitrile glove manufacturer, said on Tuesday its net profit fell 69% in the second quarter as export revenue declined with the rising ringgit while raw material costs surged.
Net profit for the three months ended Sept 30, 2024 (2QFY2025) was RM8.63 million, Hartalega said in an exchange filing. The company would have made a pre-tax loss of RM47.45 million without deferred tax income from incentives for capital investments for its domestic expansion.
Revenue for the quarter surged 44% year-on-year to RM652.07 million, thanks to higher volume. The company also declared a first interim dividend of 0.56 sen per share, payable on Dec 11.
Headwinds persist for the industry due to ongoing global oversupply even as the sector continues to undergo “supply-chain stock adjustments and move towards equilibrium”, Hartalega flagged. Average selling prices remain under pressure from a “highly competitive market”, it said.
The glove sector is grappling with global shipping disruptions while facing a volatile foreign exchange market, the company flagged. Hartalega derives nearly all of its revenue from exports.
However, demand is showing signs of recovery as pandemic stockpiles deplete and consumption normalises, Hartalega said, noting that domestic producers are also streamlining capacity, easing oversupply issues.
Hartalega said the upcoming US tariff hikes on Chinese gloves effective in January 2025 could benefit Malaysian manufacturers, helping to regain their footing in the US market.
In anticipation of a more favourable demand environment, the company said it will continue to ramp up production capacity and gradually commence new production lines.
"Moving forward, the group will maintain its focus on disciplined fiscal management, enhance operational efficiencies, as well as continue to drive automation and digitalisation initiatives across its operations," Hartalega added.
For the first half ended Sept 30, 2024 (1HFY2025), the group posted a net profit of RM40.55 million, compared to a net loss of RM24.77 million in 1HFY2024, as revenue jumped 38.5% to RM1.24 billion from RM892.12 million.
Shares of Hartalega fell as much as six sen or nearly 2% after the results were announced. The stock then rebounded and was trading at RM3.30 at 3.15pm, giving the company a market capitalisation of RM11 billion. More than nine million shares changed hands.