KUALA LUMPUR: Hartalega Holdings Bhd kicks off a new round of the widely expected supernormal profit from Malaysia's major rubber glove manufacturers for their latest three-month period.
Hartalega saw its net profit increased more than 10-fold to RM2.26 billion in the first quarter ended June 30 2021 from RM219.72 million a year ago.
The company said this was contributed by higher sales revenue and lower utilities expenses, which were partly offset by the increase in raw material price.
Its Q1 revenue rose nearly threefold to RM3.90 billion from RM920.09 million on the back of higher average selling price and sales volume.
Hartalega's strong performance came amid analysts' expectations that glove companies would no longer post stellar earnings beyond 2022 amid the downward pattern of the rubber glove average selling prices and additional new capacity that would come on stream.
Besides Hartalega, a few other glove companies are expected to release their quarterly earnings this month.
Top Glove Corp Bhd, for example, is expected to post a net profit of RM8.91 billion for its financial year ending Aug 31, 2021 according to Bloomberg data.
This would be a 376 per cent year-on-year (YoY) jump from RM1.87 billion net profit the year before.
Kossan Rubber Industries Bhd will likely report RM3.3 billion net profit for its year ending December 31, 2021 (up 203 per cent YoY), while Supermax Corp Bhd is expected to post a net profit of RM3.7 billion for its year ended June 30, 2021 (up 602 per cent YoY).
Hartalega itself is expected to post RM3.89 billion net profit for its year ending March 31, 2022 (up 35 per cent YoY).
Despite analysts' generally bearish 2022 earnings outlook, Hartalega is still bullish.
The company said the demand for medical supplies such as gloves would likely remain elevated in the immediate term due to worldwide infections of the delta variant.
However, the company acknowledged that the average selling prices for gloves had been declining from its peak moving into second half of the year.
Meanwhile, Hartalega said it would continue to expand its capacity in Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang, Selangor in tandem with the growing rubber glove demand globally.
"To date, eight out of 10 lines in (Plant 7) have been commissioned. Upon full commissioning, Plant 7 will have an annual installed capacity of 2.7 billion pieces," it said in a statement yesterday.
Hartalega said construction for the upcoming expansion (NGC 1.5) was underway.
It to commission the first line by December 2021.
"NGC 1.5 expansion plans include four additional production plants which will contribute 19 billion pieces to the annual installed capacity," it said.
With the completion of NGC 1.5, the company's annual installed capacity will increase to 63 billion pieces per annum.