Hartalega expects headwinds to persist in rubber gloves market

Kuala Lumpur – Hartalega Holding Berhad expects “strong headwinds” for the rubber gloves industry as post-pandemic oversupply continues.

The Malaysian gloves maker reported a pre-tax loss of RM45 million (€8.9 million) for the quarter ended 30 June, down from a pre-tax profit of RM134 million the year before.

First quarter sales declined 48% year-on-year to RM406 million, primarily due to lower sales volume and average selling prices (ASPs), Hartalega announced 9 Aug.

The Malaysian group linked the loss to “the significant reduction in revenue”, as well as higher operating costs despite lower raw material costs.

In addition, the group recognised a provision for severance pay of RM47 million following the decommissioning plan announced in May.

Commenting on the near-term outlook of the market, the gloves maker said it expected strong headwinds as the global oversupply situation persists.

“Aggressive capacity expansion by regional players, coupled with excessive inventory build-up during the pandemic have led to the current market supply-demand imbalance,” Hartalega noted.

Meanwhile, it said, the industry saw operating margins impacted by increased operating costs, such as higher energy and labour costs over the recent months.

Furthermore, rubber glove pricing remains competitive while manufacturers have “minimal success” with incremental costs passthrough.

“Although capacity rationalisation is expected to continue, the challenging landscape is likely to persist for the time being,” continued the gloves maker.

The group is currently undergoing a five-year rationalisaiton programme, following which it expects to see improvement in operational and cost efficiencies.

Over the longer term, Hartalega said, despite the ongoing market challenges, glove consumption is expected to grow with increased usage, especially from emerging markets.

The increase in demand could also be driven by the higher awareness of hygiene and health consciousness among healthcare practitioners post-pandemic.