PETALING JAYA: Glove maker Hartalega Holdings Bhd expects to see recovery in demand for gloves to pick up in second half of 2024, running into 2025. Chief Executive Officer Kuan Mun Leong said demand for gloves will remain weak for this year, with marginal improvements by end of next year, as most gloves purchased during the pandemic, that are still on shelves, expire by end-2023 or next year.
"Global demand for gloves remains soft, with the monthly global import of gloves now at around 15 billion gloves per month in first four months of calendar year 2023, as compared to the pre-pandemic level of 20-25 billion pieces of gloves per month," he told reporters after the annual general meeting here today.
Hartalega posted a net loss of RM52.5 million for the first quarter ended June 30, 2023, on RM440.0 million revenue.
Kuan expects lower average selling price for gloves continue for the next quarters against the backdrop of oversupply situation.
Kuan said that the discontinuation of older facilities, which is part of its five-year plan should lead to lower operating cost and hence, help to ease the pressure of escalating costs in the near term.
The company is decommissioning its Bestari Jaya production facility, and consolidating operations at its Next Generation Integrated Glove Manufacturing Complex in Sepang.
"The decommissioning Bestari facility will reduce its production capacity by 30 per cent to 31 billion pieces per annum, and is expected to be completed by end-2023.
Bestari Jaya facility consists of four production plants, with 40 production lines or 13 billion pieces per annum.
Kuan said the industry is undergoing consolidation, with new players joining in.
Many have ceased operations, and some, like Malaysia's glove manufacturers, are retiring older plants, following Hartalega's lead.
"This move, aims to enhance competitiveness in a more challenging market. As the market recovers and buying resumes, Hartalega is expected to benefit, partly because buyers seek alternatives to China," said Kuan.
Hartalega currently holds RM1.6 billion in cash and is highly discerning in its investments, reserving these funds for people-centric initiatives and promising new opportunities, said Kuan.