KUALA LUMPUR (Sept 2): Hartalega Holdings Bhd (KL:HARTALEGA) expects revenue to remain flat or show slight growth for the financial year ending March 31, 2026 (FY2026), despite demand volume returning to Covid-19 levels, as persistent oversupply and suppressed average selling prices (ASP) are likely to continue for the next one to two years.
The global demand for gloves is projected to reach about 370 billion pieces by 2025, which is close to the pandemic peak of about 380 billion pieces in 2021, according to its CEO Kuan Mun Leong.
In 2024, global glove demand stood at 357 billion pieces.
The group said that the operating environment remains challenging for the glove sector, as it continues to be plagued by oversupply and suppressed ASP concerns.
The oversupply, driven by excess capacity built during the pandemic and the new plants by Chinese glove producers in Southeast Asia, is expected to last for at least one to two years.
On a positive note, Kuan shared that Malaysian producers, including Hartalega, have benefitted from the higher US tariffs imposed on Chinese glove imports, which help to boost market share among Malaysian glove makers in the US. Hartalega commands an average of 13% share of the US market. For the first quarter ended June 30, 2025 (1QFY2026), sales to the US contributed 53% of the group’s total sales, improving from 50% in the preceding quarter.
Malaysia's glove exports to the US are subjected to 19% tariffs, while China-made gloves face a steep 80% tariff in the US market.
However, he cautioned that with Chinese producers adding new capacity in Indonesia and Vietnam, competition for market share in the US may intensify.
“To deal with these challenges, we are reinvesting heavily in upgrading our production technology, going further into automation. We are intensifying our cost optimisation efforts and driving operations excellence in our factories to make ourselves more efficient to compete with the competitors,” Kuan said.
“In the past four months, we have actually optimised our workforce by reviewing all our operations practices. We managed to reduce our workforce by up to 15% through productivity improvement. So this is an example of what we are doing now to deal with the market challenges and suppressed ASP,” he explained.
Hartalega's net profit more than halved to RM12.61 million in 1QFY2026 from RM31.93 million, as it faced weaker prices and lower volume as well as reduced export receipts.
Revenue slipped 5% year-on-year to RM553.1 million, from RM583.84 million, the group said in a filing with Bursa Malaysia last month.
At noon break, the share price of Hartalega rose one sen or 0.85% to RM1.19, giving the group a market capitalisation of RM4.08 billion.