Hartalega's 3Q FY2022 Result ( with Good Dividend? )

Another quarter of declining revenue and profits for one of the world's largest glove makers - Hartalega Holdings Bhd. Anyway, wasn't it already expected by all of us? 🤣

For the quarter ended 31 December 2021 (Q3FY22), the Group registered a lower revenue of RM 1.01 billion, recording a decrease of RM 1.12 billion or 52.8% from the corresponding quarter in the preceding year (Q3FY21).

Profit before tax has decreased by RM 993.5 million or 73.8% to RM 352.4 million, as compared to RM 1.35 billion in Q3FY21.

What can we expect moving forward?
The lower revenue was mainly due to the decline in both average selling price (ASP) and sales volume, attributable to the lower sales demand and increased supply from major and new glovemakers.

For the quarter ended 31 December 2021 (Q3FY22)

The average selling price for gloves has been declining rapidly from its peak in the first half of the financial year moving into the second half of the financial year. The tapering of the average selling prices in recent months is due to the increased supply from major and new glovemakers and moderating demand as customers continue to adjust inventories in view of declining selling prices.

Post pandemic, the sector is expected to undergo a structural step-up in demand on the back of increased glove usage from emerging markets with low gloves consumption per capita and heightened hygiene awareness.

Moving forward, Hartalega will continue to focus on improving efficiency and automation across its operations. It remains optimistic about the longer-term prospects underpinned by growing demand for rubber gloves and ongoing expansion plans.

Expansion Update:

• In line with the growing rubber glove demand globally, the Group will continue to expand capacity in NGC, Sepang.
• To date, 8 out of 9 lines in Plant 7 have been commissioned.
• Upon full commissioning, Plant 7 will have an annual installed capacity of 2.6 billion pieces.
• The construction for the upcoming expansion under NGC 1.5, is currently underway and the Group targets to commission the first line by October 2022.
• NGC 1.5 will house 4 additional production plants which will contribute 19 billion pieces to the annual installed capacity.
• With the completion of NGC 1.5, the Group’s annual installed capacity will increase to 63 billion pieces per annum.
  

Dividend 💝💝💝

The Board has declared a second interim dividend of 14.80 sen per share single tier in respect of the financial year ending 31 March 2022 and payable on 9 March 2022. The entitlement date has been fixed for 23 February 2022.

The Group is committed to its dividend policy of distributing a minimum 60% of the Group’s annual net profit, after taking into consideration of the special one-off “Prosperity Tax” (Cukai Makmur) which will be reflected in the last quarter of the current financial year.

Date: 8 February 2022

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