KUALA LUMPUR, Aug 9 ― Hartalega Holdings Bhd recorded a net loss of RM52.47 million for the first quarter ended June 30, 2023 (1Q 2023) compared to a net profit of RM88.28 million in the same period a year ago.
Its revenue depreciated to RM440.04 million versus RM845.67 million due to lower sales volume and average selling price (ASP) as the industry continued to face an oversupply situation and supply chain inventory adjustment.
“Strong headwinds in the glove sector are expected to continue as the global oversupply situation persists.
“Aggressive capacity expansion by regional players, coupled with excessive inventory build-up during the pandemic, has led to the current market supply-demand imbalance and industry-wide suboptimal operating level,” the glove manufacturer said in a filing with Bursa Malaysia today.
The company said the domestic glove industry has earlier contended with increased operating costs, such as higher energy and labour costs.
As a result, glove manufacturers are impacted by operating margin compression as the ASP price for rubber gloves remains competitive amid minimal success with the incremental costs pass-through, said Hartalega.
“Although capacity rationalisation is expected to continue, the challenging landscape is likely to persist for the time being. To ensure business sustainability and resilience over the longer term, the group has embarked on a five-year strategic plan.
“The ongoing rationalisation exercise represents one of the key approaches under this plan, whereby the group has commenced decommission of the Bestari Jaya facility with the objective of consolidating its operations at the Next Generation Integrated Glove Manufacturing Complex in Sepang,” it said.
Hartalega added that the decommissioning of its Bestari Jaya facility, which comprises four production plants, some of which have been operational since 2004, is targeted to be completed by the first quarter of the calendar year 2024.
Upon completion, the group expects to see improvement in operational and cost efficiencies, thus enhancing the group’s overall competitiveness moving forward.
At lunch break, shares of Hartalega slipped 0.47 per cent to RM2.13 with 9.89 million shares transacted. ― Bernama
