KUALA LUMPUR (Feb 7): Hartalega Holdings Bhd, the world's largest nitrile glove maker, slipped into the red in the third financial quarter ended Dec 31, 2022 (3QFY2023), with a net loss of RM31.91 million compared to a net profit of RM259.06 million a year ago, on significant moderation in average selling prices (ASPs) and lower sales volume, along with higher energy and labour costs.
Chief executive officer Kuan Mun Leong also attributed the weak quarterly performance to intensified competition in the glove sector, with softer sales demand owing to excess glove inventories and stock adjustment in the supply chain.
It also represented the second loss-making quarter for the group in 12 months, having recorded a net loss of RM197.9 million on a revenue of RM968.69 million for 4QFY2022.
As a result, Hartalega recorded a loss per share of 0.93 sen for 3QFY2023, compared to earnings per share (EPS) of 7.58 sen for 3QFY2022.
Revenue for 3QFY2023 fell 54% year-on-year (y-o-y) to RM461.84 million from RM1.01 billion. It was the group’s weakest quarterly revenue since 3QFY2017, when Hartalega recorded a revenue of RM456.29 million.
The weak quarterly performance also dragged Hartalega’s net profit down by 97.5% y-o-y to RM84.71 million for the nine-month period ended Dec 31, 2022 (9MFY2023). EPS came in lower at 2.48 sen for 9MFY2023, compared with RM1 for 9MFY2022.
Revenue for the period fell 72.7% to RM1.89 billion, from RM6.92 billion for 9MFY2022.
“On top of the significant reduction in revenue, the 9MFY2023 performance was also affected by higher energy and labour costs, partly offset by lower raw material costs and other operating expenses,” Hartalega said in a filing with Bursa Malaysia on Tuesday (Feb 7).
It expects pressure on operating margins to continue, amid current softened ASPs of rubber gloves.
In a separate statement, Kuan said that in view of the challenging landscape, the group had taken proactive measures to ensure prudent cost management, enhance operational efficiencies, and optimise productivity through automation initiatives. "We will continue to align our Next Generation Integrated Glove Manufacturing Complex (NGC) 1.5 expansion plan with the current market supply and demand dynamics.”
At noon market break, shares in Hartalega rose one sen or 0.62% to settle at RM1.63, translating into a market capitalisation of RM5.59 billion.