KUALA LUMPUR: Hartalega Holdings Bhd will maintain focus on manufacturing medical glove despite rivals diversifying into contact lens, condoms and car components.
Executive chairman Kuan Kam Hon said the company sees plenty opportunities to remain in the glove industry, citing that there is no need for them to remodel themselves to be multi-product company.
"We see glove as our mainstream business. There is a reason why we are able to continue to be in a leadership position, as we focus on just being a glove producer.
"We have set various standards like in the innovation of product as well as in the engineering capability. As you can see from the company’s profitability, all the numbers shown that we are more efficient and better-run glove company," he said in a group interview with reporters recently.
Hartalega's second quarter profits ended September 2017 rose 60 per cent to RM113.34 million from RM71.22 million previously, thanks to higher medical glove sales and foreign exchange gains.
To note, Top Glove Corp Bhd, another glove manufacturer, has diversified into condom business and investing RM75 million for its first phase of the manufacturing facility by August next year.
It was reported that its chairman Tan Sri Dr Lim Wee Chai has expressed confident the condom business would soon contribute to Top Glove’s profits.
Another player, Supermax Corp Bhd, has also ventured into contact lens manufacturing, noting that glove producers are facing intense competition, and slimmer margins.
The company said contact lens business is a high value-add sector that requires no foreign labour with stable raw material cost, which would result in sizeable margins.
On Hartalega’s expansion plan, Kuan said the company has embarked on developing its Next Generation Integrated Glove Manufacturing Complex (NGC) plants in Sepang.
He said the NGC will be completed in stages, which requires capital expenditure of RM2.2 billion.
At the moment, three NGC plants with 37 production lines have been fully commissioned in early 2015.
The NGC is expected to substantially boost Hartalega annual capacity from 14 billion to 42 billion pieces progressively.
Kuan said the company would spend between RM300 million and RM400 million for each plant in the next three years to construct another three NGC plants.
To date, we spent RM1.2 billion in NGC project and it would have a total of six manufacturing plants including workers quarters, research and development centre, sports complex as well as learning centre,” he said.
Kuan added currently plant 4, 5 and 6 are not fully completed. The plant 4 would provide an additional of 4.7 billion pieces of gloves annually.