For the current quarter ended 30 June 2023 being Q1 for 2024, Hartalega registered a lower revenue of RM 440 million, a decrease of RM 406 million or 48% from the corresponding quarter in the preceding year. The group said the drop in sales revenue was primarily attributed to the lower sales volume and average selling price (ASP) as the industry continued to face an oversupply situation and supply chain inventory adjustment.
Loss before tax was RM 45 million as compared to a profit before tax of RM134 million in Q1FY23, while the loss for the period stood at RM51 million. The loss before tax recorded was mainly due to the significant reduction in revenue, as well as higher operating costs despite lower raw material costs. In addition, the Group also recognised a provision for severance pay of RM 47 million following the decommissioning plan announced on 8 May 2023.
Revenue for the current quarter decreased by RM 78 million or 15% as compared to the preceding quarter (Q4 2023). The lower revenue recorded in the current quarter was primarily due to a 26% decrease in sales volume, which was partially cushioned by a marginal increase in ASP. The Group recorded a loss before tax of RM 45 million, as compared to a loss of RM 355 million in the preceding quarter (Q4FY23) which was mainly due to the one-off assets impairment loss of RM 347 million recorded by a subsidiary.
On prospects and targets, Hartalega expects strong headwinds in the glove sector to continue as the global oversupply situation persists. Aggressive capacity expansion by regional players, coupled with excessive inventory build-up during the pandemic have led to the current market supply-demand imbalance and industry-wide suboptimal operating level.
Although capacity rationalisation is expected to continue, the challenging landscape is likely to persist for the time being. To ensure business sustainability and resilience over the longer term, the Group has embarked on a 5-Year Strategic Plan. The ongoing rationalisation exercise represents one of the key approaches under this plan, whereby the Group has commenced decommission of Bestari Jaya facility with the objective of consolidating its operations at the Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang. The decommissioning of the Bestari Jaya facility, which comprises four production plants, some of which have been operational since 2004, is targeted to be completed by the first quarter of calendar year 2024. Upon completion, the Group expects to see improvement in operational and cost efficiencies, thus enhancing the Group’s overall competitiveness moving forward.
