Rubber gloves maker Hartalega to focus on ‘better cost management’

Kuala Lumpur – Malaysian rubber gloves manufacturer Hartalega is focusing on “better cost management” as prevailing headwinds in the sector are expected to persist for the near future.

Over the second quarter of ’24 fiscal year, ended 30 Sept, Hartalega reported a 63% year-on-year decline in operating profit to RM16 million (€3 million), on 23% lower sales of RM132 million.

The lower revenue was primarily attributed to lower sales volume and lower average selling price (ASP), the group announced 7 Nov.

The lower profit, it added, was “in tandem with the drop in revenue, after offset with savings arising from lower operating costs”.

For the six months to end of September, the group reported a loss of RM9 million, compared to a profit of RM171 million registered for the same period the year before.

Sales for the period dropped nearly 38% to RM892 million, on 27% lower volumes and lower ASP.

The group linked the loss primarily to the one-off provision for severance pay of RM47 million for the decommissioning of its Bestari Jaya plant, recognised in first quarter (ERJ report).

Commenting on the market, Hartalega said the prevailing headwinds in the glove sector are expected to persist for the remainder of the financial year.

As the market continues to adjust from global oversupply, it added, pressure on average selling prices is likely to continue amid "intense market competition".

However, the manufacturer noted that capacity rationalisation across key domestic manufacturers as well as exit by certain smaller players “have alleviated” some of oversupply pressure in the market.

Touching on the previously announced five-year strategic plan, Hartalega said the decommissioning of its Bestari Jaya facility is expected to be completed by the first quarter of calendar year 2024.

Furthermore, the group is consolidating all its manufacturing operations at the “more efficient and advanced” next generation integrated glove manufacturing complex (NGC) in Sepang.

Upon completion of such measures, the group said it expected to see improvement in operational and cost efficiencies.

This, it added, will enhance overall competitiveness, putting the group in “a better position for future market recovery.”

Moving forward, Hartalega said it would continue to emphasise on better cost management, improve operational efficiencies and scale up automation initiatives across operations.

Notwithstanding the ongoing market adjustment, the group said it expected glove consumption to grow over the long term.